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July 31, 2021

Tourism, a sector totally closed to foreign investors – BNR official says

Gov’t could reduce micro-enterprise turnover tax to 1.5 pc, the minister for SMEs and Tourism, Maria Grapini said.

The poor quality of tourism and its inefficiency represent enough arguments for those who complain about the privatisations with foreign investors in the banking system or the metallurgical industry, believes the chief-economist of BNR, Valentin Lazea. The BNR official considers that tourism was a sector totally closed to foreign investors, which allocated to hotels and restaurants less than 1 pc of the total volume of investments in the Romanian economy. This also explains the deficit of balance in the tourist sector, where the sums paid by Romanians for vacations abroad outweigh by far the incomes from foreigners that spend holidays in Romania. Tourism and trips represent the main source of deficit in the sector of services, with a minus of nearly EUR 300 M last year and approximately EUR 400 M in 2011. In the first two months of this year, despite a positive evolution in most chapters of the current account of the balance of payments, tourism still had a deficit of EUR 41 M.

Tax, calculated as a fix sum depending on some indicators, per activity basis

The lump-sum tax will be calculated as a fixed sum, depending on certain indicators for each activity sector, and companies will pay less than if they paid 16 pc of their profit, or 3 pc of their income, the minister for SMEs and Tourism, Maria Grapini explained. She gave as example the seaside and mountain hotels, where seasonality is taken into consideration when deciding the sum to be paid. Grapini mentioned that, in these services, tax evasion is very high and all the hotels and guesthouses in Romania paid in 2011 a smaller tax than car repair shops.

She added that certain specific indicators had to be set for car wash and service units.The lump-sum tax that will be enforced starting July 1st will operate only in certain sectors, like guesthouses, hotels, restaurants, beauty salons or car wash units.Grapini also said that the Ministry of Finance will make an impact study of the effects of the VAT charged at the payment of invoices, six months after the implementation of this measure, and there are two possible lines of action: either it will be expanded to all companies, or it will be made optional. According to the minister, in the optional variant, in Poland, only half of those who would have qualified chose to charge the VAT at the moment of payment, precisely because of the pressure put by large companies.

The 3 per cent turnover tax currently paid by micro-enterprises, compulsory since the beginning of this year, could drop to 1.5 per cent starting from July, the Ministry of Finance now performing an impact study on the subject, at the proposal of the Minister for SMEs and Business Environment, Maria Grapini, according to Mediafax. ‘The 1.5 per cent tax rate seems fair, especially because the tax calculated based on the turnover is mandatory since February. My interest is to collect, of course, but to also give them a chance to develop, grow and then move up to a higher taxation category,’ Grapini told. She said very small amounts had been collected from the tax on micro-enterprises in the past, therefore a reduction would lead to voluntary conformity and better transparency as far as those companies were concerned, as they would see in that a first step taken by the authorities in their direction.

Grapini also says such an approach has been also considered for service providing operators, where assessments were made on four different sectors: hotels and BBs, restaurants, cafes and garages. The minister explained that garages had paid higher tax than all accommodation providers in Romania in the past years. Grapini wants a CAEN code-based taxation in conjunction with the profitability and commercial exposure of each industry. Although money has been spent, in the SME sector the expected results have not shown, Grapini concluded.

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