Romanian government's upcoming fiscal amnesty enrages honest taxpayers

The fiscal amnesty announced again in June by the Finance minister Eugen Teodorovici is causing discontent in the private sector, as many small business owners disagree with the government’s decision.

Although the Finance minister has spoken about the fiscal amnesty on several occasions this year, it is still unclear what the measure would actually entail.

The Fiscal Agency’s website has a list of 11,131 individuals, including some who hold public office, who have outstanding debts to the state. The blacklist of indebted companies, including state-owned and private companies, published in September 2018, only the first 500 companies are listed publicly, whose cumulative debts reach RON 13.3 billion.

Electrocentrale Bucuresti is the first such company with over RON 800 million of debt, followed by Complexul Energetic Hunedoara, where the state is a major shareholder, with RON 735 million of debt.

Florin Jianu, the president of the National Small and Medium Private Enterprise Council in Romania, says that more than three quarters of the people he represents do not agree with the fiscal amnesty. Instead, individuals should benefit from this measure, agree four out of ten respondents to the SME survey. Also, more than 40 percent of Romanian business owners believe that micro-enterprises should also get some form of a tax amnesty. “One in 15 respondents is of the opinion that all state-owned companies should enjoy fiscal amnesty, while three out of ten say small businesses should be included in the state’s future decision,” said Jianu.

Tax amnesty: negative effects

In terms of the negative effects the fiscal amnesty might cause, the vast majority of respondents to the SME survey believe that it would encourage the avoidance of payments of debts to the state. Moreover, such a measure would send small companies towards the area of tax evasion.

“The SME sector needs to benefit from the public policy stance to ensure smart regulation, systematic consultation with representative organizations, increased access to finance and, most impostantly, the de-bureaucratization of the business environment. Instead of a controversial fiscal amnesty, with obvious negative effects, disadvantages and inequities towards honest taxpayers, measures should be taken to encourage voluntary compliance and provide bonuses for entrepreneurs who pay all their taxes on time,” said Jianu.

Though the demands of SME representatives seem reasonable, it is very likely that they won’t convince state officials, since predictability is not part of their agenda. This conclusion is based on the fact that in the first six months of 2019, through 8 legislative acts (7 emergency ordinances and a law) 35 articles from the Fiscal Code were amended.

At the same time, the legislative framework was significantly change, with 614 legislative acts: 120 laws, 4 government ordinances, 46 emergency ordinances, 444 government decisions, as well as several ministerial orders.