News

Daily Newsletter - 6 July 2017

Summary

FIC (2)

Second tax revolution has investors panicking (Source: cursdeguvernare.ro)

The Foreign Investors Council (FIC) is worried by the substantial changes to the governing program, announced recently. A speedy implementation of such fiscal policies without proper analyses, impact assessments and consultations will have a negative impact on the activity of all businesses in Romania in all sectors, large and small. In the past year, FIC members have argued repeatedly that Romania can become the 10th largest economy in the European Union in the next two decades but these kind of radical policy changes, that breed uncertainty, put Romania further away from that objective. The new measures which have a large potential impact are sending negative signals towards the business community and potential investors.

Predictability is crucial to economic development. Impact assessments and proper consultations are mandatory when adopting new policies  (Source: nine o clock)

Government's plan for second fiscal revolution in six months caused panic (Source: profit.ro)

FIC: Turnover tax is contrary to EU rules (Source: business24.ro)

FIC: Government program change undermines investor trust (Source: capital.ro)

Foreign Investors Council concerned about proposed changes (Source: mediafax.ro)

Foreign Investors Council concerned about proposed changes (Source: gandul.info)

FIC: Turnover tax is contrary to EU rules (Source: economica.net)

Foreign investors driven away by fiscal insanity (Source: ziare-pe-net.ro)

New political changes destabilize economy (Source: saptamana.com)

Videoclip   (Source: tvr 2)

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Direct VAT payments - A double-edged weapon against VAT evasion 

The Cabinet's updated platform features, among other fiscal measures, the implementation of a direct VAT payment system, beginning with September 1, 2017. The stated purpose of the new system is to eliminate VAT evasion. However, as far as we can tell, the system applies only to state contracts. Under the current system, companies operate as tax collectors on the state budget's behalf, in the sense that they issue invoices, collect the tax, deduct their own VAT and the reminder is supposed to be sent to the budget. The new system eliminates the collection services that tax-payers are supposed to perform and the state collects VAT directly. Instead of having the VAT included in invoices, buyers will pay it directly into a government account.

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Macroeconomic News (4)

Bad news for Romania's EU funds 

When it comes to the absorption of EU funds, only one thing worked properly: direct payments to farmers. The program was simple and no projects were needed - the deed to the land was enough to get money. However, these funds are now in doubt, following a modification in the way subsidies are granted.

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Vineyard owners and wine producers can apply for financing 

The Ministry of Agriculture announced on Wednesday that the 2014-2020 National Support Program (PNSR) now allows vineyard owners and wine makers to apply for financing in order to build wine cellars, quality assurance laboratories, tasting rooms, showrooms and stores.

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"Below 4%, nobody can prove that the turnover tax would hurt competition" 

The fiscal situation generated by taxing businesses using the gross value of their economic output as the baseline has some irrefutable advantages, according to economist Daniel Ionescu, a former deputy and CNVM commissioner. Ionescu noted that the turnover tax is low on paperwork, anti-inflationary, it shortens the reseller chain, has a higher collection rate and renders useless any attempt to disguise profits.

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Retail sector turnover up 

The retail sector's turnover went up 4% in May, compared to the previous month, according to the National Statistics Institute (INS). The annualized growth rate was 14%. The sales of non-food goods outpaced food sales 15.4% to 13.3%, year-on-year.

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Financial News (4)

BR close to sale 

National Bank of Greece (NBG), the second biggest banking group in Greece, will sell a number of Balkans assets, including its Romanian operations, according to statements made on Tuesday by CEO Leonidas Fragiadakis. "We are very close to announcing the name of Banca Romaneasca's buyer," said Fragiadakis.

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OTP Bank and Piraeus Bank gain systemic importance 

Beginning with March 1, 2017, OTP Bank and Piraeus Bank have become banks of systemic importance and additional capital requirements in Romania, according to the annual report released by the National Bank of Romania (BNR).

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Local bank agrees to return fee 

A local bank agreed to return EUR 1,800 in abusive fees to a Bucharest client. The bank settled after only eight days of negotiations, the shortest period so far, according to the Alternative Resolution Center (CSALB).

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Mugur Isarescu: Excess cash reached EUR 3 billion 

The volume of excess cash sloshing around the national market is EUR 3 billion, with the minimum mandatory reserves amounting to another EUR 3 billion, according to Mugur Isarescu, Governor of the National Bank of Romania (BNR). "Can anyone say the market lacks cash? And the loans to deposits ratio is still subunitary," said Isarescu.

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Legislative News (2)

Domain management bill scheduled for September 

The bill regarding the management of .ro Internet domain should come before the Cabinet in September. A work group has already been established to write the bill, according to former minister of communications Augustin Jianu.

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PPP bill could be ready for enforcement in October 

The public-private partnership law could be ready for enforcement in October. The authorities are currently working on the implementation guidelines, in order to make the bill as simple and as clear as possible, according to the Minister of Trade, Ilan Laufer.

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Politics (2)

Sorin Grindeanu posts explanation 

Former prime minister Sorin Grindeanu explained on Facebook his decision to challenge the motion of censure vote before the Constitutional Court. Grindeanu accused his former party leader, Liviu Dragnea, of having threatened the party's MPs before the vote.

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PM met German ambassador 

Prime Minister Mihai Tudose met on Wednesday with the German ambassador, Cord Meier-Klodt, in order to discuss the two countries' common political and economic projects. Germany is the second biggest investor in Romania.

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