Finance Ministry publishes draft law to change controversial OUG 114

Anca Alexe 27/03/2019 | 08:35

The Finance Ministry has published a draft emergency ordinance that will be passed to amend the provisions of Emergency Ordinance 114, which unexpectedly introduced a series of fiscal changes at the end of 2018, including a tax on bank assets, a revenue tax on energy companies and capped gas prices. The most significant changes introduced on Tuesday are related to banks, energy and pension pillar II. The full draft of the ordinance can be viewed here.

Bank asset tax

The new tax levels to be applied to a changed taxable base will be 0.4 percent per year for banks with a market share that is equal or higher than 1 percent and 0.2 percent per year for banks with a market share below 1 percent. Market shares are established at the end of the semester/year for which the tax is owed. Banks can obtain a reduction of up to 50 percent if they achieve a certain level of loans given out to non-financial entities and households. Banks who record losses are exempt from the asset tax.

The taxable base for the asset tax does not include:

  • Cash
  • Net cash amounts in central banks, excluding non-performing exposures
  • Non-performing net exposures
  • Debt bonds issued by public administrations, excluding non-performing exposures
  • Loans and advances issued to public administrations, excluding non-performing exposures
  • Loans given out to the non-governmental sector that hold guarantees from the central public administration, excluding non-performing exposures
  • Loans given out to credit institutions, attached debts and amortised amounts, excluding non-performing exposures; correspondent accounts at credit institutions; reverse repo operations and borrowed bonds, excluding non-performing exposures.

New formula for loan interest rates

The government will change the way the reference interest rate for RON loans is calculated. These loans will no longer be based on the ROBOR, but on a reference index based on inter-bank transactions, to which the creditor can add a fixed margin throughout the contract period. Finance minister Eugen Teodorovici said on Tuesday that the new formula will only be applied to new bank loans, but also that those who will want to switch to the new formula will be able to do so.

The reference index for RON loans with variable interest rates will be published every working day on the BNR website and represents the interest rate calculated as a weighted average of interest rates and transaction volumes on the inter-bank market. The reference index is calculated at the end of each quarter as the average of daily interest rates of the previous quarter, and will be applied by every bank for the upcoming quarter.

Pension Pillar II

OUG 114 would have required the seven Pillar II fund administrators to increase their capital by RON 3.55 billion by the end of the year (of which RON 1.6 billion by the end of June), but this requirement has been postponed from March 31 to May 31, while the first June deadline for payment has been postponed until December. Therefore, if fund administrators don’t reach an understanding with the government by the end of May, they’ll have enough time to comply with the new requirements until the end of the year.

Turnover tax on energy businesses

The 2 percent tax has been cancelled for coal-based energy producers, despite the fact that the Competition Council has warned that this measure could be seen as state aid and that it should first be discussed with authorities in Brussels.

On April 9, Business Review will organise the 17th edition of the Tax & Law Conference, our flagship event that offers a full perspective on the latest fiscal and legislation changes that impact the private sector. This year’s edition will focus on the raft of fiscal changes that address the telecom, energy and banking sectors, alongside the latest fiscal trends in the European Union that are also taking ground locally. 

Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue