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January 21, 2022

Ponta Cabinet pledges measures to boost growth, jobs

The business community welcomed the set of measures as a proper modality to contribute to attracting investments with a purpose of increasing Romania’s competitiveness in international markets.

PM Victor Ponta announced yesterday morning several measures aimed at securing economic growth, job creation and social justice. Within these measures, there is VAT payment at the time of collecting the amount invoiced for companies with a turnover up to maximum EUR 500,000, conditional upon payments made through the bank. The effective application date remains to be established after official talks with the IMF team. In this respect, Minister of public Finances, Florin Georgescu, outlined that the measure would not have an adverse impact on the budget. In his turn, State Secretary Liviu Voinea, said that this measure would not be applied for intra-group companies, but it is possible to reduce fictive VAT repayments. “Companies are not allowed to deduct VAT unless they pay, the only situation when a negative cash flow may occur in case of state budget being when at the end of payments there is a public institution which is not a VAT payer”, Voinea added. Even for this case, considering that public institutions develop important activities with medicine producers or with construction companies, with turnovers higher than EUR 500,000, the revenues to the budget will not be affected. In worst case scenario, considering that 17 percent of pharmacies have a turnover below EUR 500,000, a possible negative impact worth maximum RON 6 M could be registered through the postponement of VAT payment, the state secretary added. Yet, Voinea indicated that an European directive would be implemented over the next weeks to force state institutions not to delay payment of invoices by more than 30 days. Currently the VAT delay can span on 180 days. VAT payment to the state budget at the time of collecting the invoiced amount and not at the issue of the invoice has been a frequent request coming from business people and there have been legislative drafts over years in this respect, which have failed to materialize.

Other measures to be implemented are: elimination of social contributions (pensions, unemployment and health insurance) for employers hiring unemployed persons aged below 25 years or over 55 years, over a time period of one year. According to Ponta, “this facility is applied for all the entrepreneurs who employ persons for one year, conditional upon this one being maintained as an employee by the company one more year”; eligible VAT for reimbursement in case of EU funded projects; an increased deductibility ceiling from 20 per cent to 50 per cent in case of investments in research – development; exemption from payment of penalties in case of state debtors for the payment liabilities settled between September 1, 2012 and December 31, 2012. Ponta indicated that the measure was addressing companies experiencing temporary difficulties.

Progressive taxation, media intoxication

At the same time, the Executive denied the information launched by Hotnews.ro according to which Romanian negotiators would propose, during the visit of IMF delegation, shifting to a progressive taxation system for the global income as of 2013. Victor Ponta called them lies and manipulations lacking any real bases, which “harm Romania”.In his turn, former PM Calin Popescu – Tariceanu, leader of PNL Deputies, outlined, in a press conference, that the single quota of 16 per cent would not modified by the Government. His specification followed certain media disinformation issued lately, according to which the Government was preparing the elimination of the single quota. Yet, he says that the option of having two regressive quotas in the future may exist.

Business people happy with the set of economic measures

Romania’s Chamber of Commerce and Industry welcomed the decisions of Government to support the business environment. “All these propositions, like may others, formulated by representatives of businesses, most of them being measures <that do not cost anything> but are aimed at putting an end to fiscal evasion and to the gray economy, addressed several fields of activity, admitting the utmost importance of attracting investments for increasing Romania’s competitiveness in the international markets”, according to a press release issued by Romania’s Chamber of Commerce and Industry (CCIR). In his turn, the president of the Association of Business People from Romania, Florin Pogonaru, declared for Agerpres, cited by Money.ro, that a measure addressing VAT payment at the collection of the amount for companies with a maximum turnover of EUR 500,000 is a normal one, proper for time of crisis. Also, the associations of businesses welcome the VAT payment at collection for companies with a turnover up to maximum 500,000 EUR, regarding it as a “10 mark worth proposition”.

IMF visit postponed up after the referendum

The list with measures proposed by Ponta Government shall be laid on the table of talks with IMF, WB and EC in Bucharest. For this, PM informed that the delegation of the EC, IMF and World Bank would arrive in Bucharest shortly after the referendum. The visit had been scheduled for July 24 but it was rescheduled. “Of course it was postponed because IMF and EC delegations have thought always that they should not come during an electoral campaign. The week July 22- 29 is the last week of electoral campaign”, PM added. Labour Minister, Mariana Campeanu, said on Monday, in answer whether it was a bad thing that IMF had postponed their visit to Bucharest until after the referendum, that USL had negotiations with the IMF before Ponta cabinet taking the office and conducted these negotiations properly.

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