Romania’s new Fiscal Code draft withdrawn over PM request

The Ministry of Finance has withdrawn over the weekend the new drafts of the Fiscal Code and Fiscal Procedure Code following a request of Prime Minister Victor Ponta, claiming that they need to be further analyzed by the government before going up for debate.

The new Fiscal Code included provisions that would allow local authorities to directly hike taxes by up to 50 percent in 2015 depending on “area specific conditions”, reported news portal hotnews.ro

Under current regulation, the local taxes are adjusted depending on the inflation rate once every three years through an Emergency Government Ordinance, and local authorities can increase it through an additional quota, which can not exceed 20 percent of the amount established by the government.

The government is also looking to increase the tax levy for individuals owning non-residential buildings. It should go up from 0.1 percent to 0.25-1.5 percent of the building’s value (or 2 percent if there is no valuation), similar to what companies have to pay.

The tax rate for cars with engines below 1,600 cbm is also set to go up, while owners of cars with engines over 2,001 cbm will pay less, according to the provisions in the new Fiscal Code.

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The Ministry of Finance said in a statement that the government wants to “initiate an open and transparent public debate” on the changes in the new codes, adding that their provisions should help economic growth and limit the increase of the tax burden.

“At present, one of the government’s priorities is to limit the tax evasion, including through changes in the Fiscal Code and Fiscal Procedure Code,” said the Ministry of Finance.

The new codes are set to be debated together with next year’s budget in Parliament.

Business advocacy group including AmCham and the Foreign Investors’ Council (FIC) have assisted specialists in the Ministry of Finance on rewriting the new codes.

Romania’s first Fiscal Code was enforced in 2004 and was constantly changed, with companies complaining with dented the country’s fiscal predictability.

Ovidiu Posirca