Bucharest, 11 November 2013
The Foreign Investors Council - FIC draws everyone's attention to the negative impact of certain fiscal measures announced by officials of the Ministry of Public Finance, regarding a new tax on special constructions in the energy sector, telecommunications, utilities & infrastructure and other sectors making use of such constructions. The FIC expresses its members concern that policy makers did not conduct a proper consultation and did not perform an impact assessment on the consequences that would affect not only the direct taxpayer but also, indirectly, through the cost, the end consumer of the products of the industries subject to the new levy.
The recent developments only go towards streghtening the opinion that the Romanian tax environment is dominated by a total lack of predictability, an ingredient all too necessary for long term investment planning. The lack of predictability and consultation when setting new taxes will lead FIC members to reconsider their position on the local market and redirect present and future investment towards jurisdictions which offer a satisfying level of fiscal stability, at least in the medium and short term.
Moreover, these negative signals of fiscal instability will also impact the process of privatizing/listing state-owned companies initiated by the Government, as these projects will be blocked by uncertainty or simply fail.
The total absence of consultation and the potential implementation of the tax on special constructions in its actual form will generate a devastating bumerang and affect the credibility of the political decision-making process.
Last but not least, the authorities estimate extra revenues of aproximately Eur 100 million following the implementation of the tax on special constructions but this amount will be outrun significantly by the real tax burden placed on the companies which own these types of constructions.
Although the FIC understands the government's need to cover the budget deficit, we kindly remind policy makers that they should focus their resources on strengthening fiscal authorities and thus improving tax collection from frequent tax evaders. It is neither moral nor fair that the authorities' failure to improve tax collection should result in higher levies for taxpayers that are already serious contributors to the state budget and whose businesses will be stifled by the new fiscal measures announced in the media. The implementation of the tax on special constructions together with the increase of the fuel excise and the 25% increase of royalties for mineral resources, with the exception of oil and gas, will have a major impact on certain economic sectors of the productive industries.
We reiterate the importance of an open and transparent dialogue which allows all stakeholders to contribute efficiently to the adoption of adequate tax measures leading to a competitive tax system and a stable business environment in Romania.
About the FIC
The Foreign Investors Council (FIC) is an association of the most prominent foreign investors in Romania. FIC was established in 1997, when it started its activities with 25 member companies. It currently has 119 multinational member companies whose cumulated investments account for almost two thirds of total foreign direct investments made in Romania since 1990. The FIC's main objective is to promote sustainable economic growth by improving Romania's investment landscape. The FIC's member companies strongly believe that the path to economic growth lies in a dialogue between decision makers and investors that ensures transparency and predictability, the development of free market mechanisms and a smooth integration of the Romanian economy in the European market.