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Representatives of the Foreign Investors Council (FIC) conveyed to the authorities the concerns of large-scale investors regarding the new turnover tax measure and its impact on the economy, as well as a series of recommendations that could reduce the imbalances in the tax system and would help avoid certain economic stalemate situations, FIC informs in a release on Thursday.
"We understand the macroeconomic context we are in, we are aware of the government's efforts to reduce the budget deficit and we support the fiscal reform plan as set forth in the NRRP (elimination of exceptions, broadening the tax base etc.). But the turnover tax is something we did not expect, because it is non-existent in most countries, with only a few exceptions in Africa and Asia, and only for certain sectors and over a limited period - in Poland and Hungary. Profit margins are not directly proportional to the size of turnover, but depend on the specifics of the industry the companies operate in, as well as on market conditions. There can be companies with a very high turnover, but operating with very small margins and contributing massively in the area of payroll taxes or indirect taxes (VAT and excise duties), which are very important in collections to the state budget and the economy. Estimates show that those companies whose profitability is below the 3 percent threshold will finance the minimum turnover tax from other sources, so practically they will turn in all the profit to the budget and they will bring money from home. Therefore, we consider that the current legislation needs three important amendments: ensuring a fair tax treatment and taking into account the industry-specific rate of return when calculating the turnover tax, limiting the applicability of the turnover tax in time, and increasing tax collection, because the latter would solve the situation of budget deficits in the future," FIC president Daniel Anghel declared.
For over 25 years, FIC member companies have been registered and are paying taxes in Romania, alone in 2022 the contribution of FIC member companies to the consolidated general budget is estimated at 84 billion RON, which represents 20 percent of the current state revenues in the respective year. Also, their investments have the end of the 1990s as a starting point, which proves their commitment to investing in Romania in the long term. 2022 investments by FIC companies stood at over 10 billion RON, representing 25 percent of capital expenditures, according to the execution of the consolidated budget.
The Foreign Investors Council includes the most important investors with foreign capital in Romania, approximately 120 of the largest companies in the country with a combined turnover that stands at a fifth of GDP and that have a significant contribution to the state budget.
