Gabriel Biris: Special tax on tourism is “toxic” to small businesses

Newsroom 30/06/2016 | 15:53

According to State Secretary with the Ministry of Public Finance, Gabriel Biris, the special tax that will replace profit tax for businesses in the tourism sector, is “toxic” to small businesses. The law, which was adopted on June 28, is due to enter force on January 1, 2017.

The law, titled “Law on the specific tax for certain activities” provides the legal framework for a new way of taxing businesses active in the tourism sector, such as hotels, as well as those in the catering sector, with the purpose to stimulate investments and eliminating unfair competition.

The draft bill was initiated by Social Democratic Party (PSD) MP Mircea Dobre in 2015. “The project is aimed at companies with over EUR 5 million turnover that employ a maximum of 250 people. It represents a very big advantage for the tourism industry, following this draft law the profit tax is eliminated and this specific tax is introduced; it will be beneficial because more money will be left for development and modernization in this sector,” Dobre said last year.

Compared to the version adopted by the Senate, the law was adopted with amendments, such as the inclusion of micro-enterprises among the beneficiaries of the law, the elimination of the condition for companies to make a net turnover of up to EUR 5 million RON equivalent, to have a total share of revenues of over 70 percent as well as to have 250 employees or less.

According to its initiator, the law was requested by the entire tourism industry in Romania “to streamline the reporting method, voluntary conforming and checks carried out on behalf of public authorities.”

However, in a recent post on his social media account, State Secretary with the Ministry of Public Finance, Gabriel Biris, said the law benefits big business and is likely to drive small entrepreneurs to bankruptcy.

According to Biris, large restaurants and nightclubs covering over 800 sq. meters in Bucharest city center will play RON 38,430 a year in tax, an amount comparable to the taxes an employee receiving the average salary is paying every year. Although big businesses at the Black Sea coast and those outside of Bucharest will pay less, the state secretary believes that big businesses are the main beneficiaries of the introduction of the specific tax in tourism.

By contrast, the minimum amount to be paid by small businesses in the sector (under 20 sq. meters), will have to pay RON 11,214 per year, meaning an amount 1460 percent higher per square meter than a business covering 1,000 sq. meters, Biris argues.

How many of the small entrepreneurs will become unemployed? Is this what our Parliament wants?” the message posted on social media by Biris reads. 

Georgeta Gheorghe

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