Romania

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  • Type: Publication series
  • Date: 11/28/2013

Fiscal Barometer November 2013 

An avalanche of changes to tax legislation has recently come to the attention of the business community, tax professionals and the media. The changes starting 1 January 2014 have been approved by the authorities in the context of broader government discussions on the projected budget for 2014. The IMF is not far from the scene either. 
Teodora Alecu

Director, Transfer Pricing

Citizens will note an additional burden at the gas station. This is the result of an increase in the excise duties on gasoline, diesel fuel and kerosene from two sources: (i) A change in the reference exchange rate used when calculating the excise duties due, owing to an inflation based adjustment (ii) An increase in the tax payable by 7 euro cents per litre. The transport industry will be the first to be affected, but this will give rise to a “domino” effect for companies in other sectors and for individuals, through a general increase in prices.

 

Although the price of fuel at pumps will suffer a significant increase, this may not be the most important development. The change which has created the most controversy is the introduction of a new “construction tax,” details of which are set out in a dedicated chapter in the Fiscal Code. In principal, the construction tax will be applicable to constructions which are not subject to local building tax. Any such fixed assets will be subject to a tax of 1.5% of their gross book accounting value. These may include telecom aerials, wind energy pillars, hydro, thermo or nuclear power plants or it may simply be pillars, pipes, roads and or other pieces of infrastructure. The tax will mainly concern the energy, telecoms and real estate industries, but others will be affected too.  

 

The construction tax represents yet another burden for wind energy companies, which have already been hit recently by the limitations on receiving green certificates and the difficulties in being granted permits to operate. It may lead many firms in the sector to give serious consideration to the feasibility of their investments in Romania. 

 

Healthcare and the pharma industry still face many difficulties. One piece of good news is that the clawback tax due on generics is expected to be changed, relaxing the tax burden. However, the current system of calculating and applying the tax has not been harmonized with the profitability profile of pharma companies. In many cases, the profit margin simply does not allow economically for a clawback tax burden at such a level. Above all, we are concerned at the impact on basic health care provision for all of us

 

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