Employers' organisations extremely unhappy with Govt's second fiscal package - minimum turnover tax in particular

The Concordia Employers' Confederation criticizes the government's decision to maintain the minimum turnover tax in the second fiscal package it is about the pledge responsibility for, while also introducing a new tax on intra-group expenses, stating that this doubles the tax burden on the same companies, discourages investments and reduces competitiveness.

"The minimum turnover tax was a fiscal policy error right from the beginning, and keeping it in place simultaneously with a new tax means doubling the burden on the same companies and compromising the chances of economic recovery. A weakened economic climate will not bring more revenue to the budget, but less. The business environment and citizens can no longer bear the burden of the budgetary imbalances generated by the political class. Romania needs real reforms, streamlining public spending and a fair assignment of responsibilities. Concordia is calling on the authorities to clarify their position: we want structural reforms that start with streamlining state spending, not fiscal ping-pong that will transform the business environment into the ATM of the political class," the employers' associations argue, agerpres reports.

In its turn, the Employers' Association of the Software and Services Industry - ANIS warns that internationally non-aligned tax restrictions and measures, including the maintenance of the minimum turnover tax and the limitation of deductions for intra-group expenses, will seriously affect the competitiveness of the IT industry.

Large Romanian companies and IT multinationals risk losing ground on the global market, while startups are particularly vulnerable, as the new provisions would block essential financing mechanisms (such as CLA loans), the Association cautioned through the voice of its president, Edward Cretescu.

The experts of the IT industry's umbrella organization believe that limiting financing through contractually negotiated protection mechanisms would discourage the involvement of investment funds and business angels in supporting the local ecosystem, as the Romanian legislation does not offer modern mechanisms used in other states, such as multiple share classes.

Also, changing the regime applicable to expense deductions exclusively in relations with affiliated entities is problematic in the absence of a solid economic or legal foundation, and without clarity in relation to the effective application.

Such an approach reduces the attractiveness of the business environment, ushers in fiscal unpredictability and runs counter to the objectives of an open, competitive and sustainable growth-oriented economy, ANIS said.