The tax on the banks’ net financial assets will be an annual tax paid half-yearly and in 2019 the first payment deadline will be August 25, Finance minister Eugen Teodorovici announced on Friday after the government meeting that approved amendments to Ordinance No. 114/2018.
“This is an annual tax on banking institutions payable half-yearly and is the product of the tax base and the tax rate; the resulting amount is reduced according to the two adjustment criteria. The deadline for the asset tax for H1 is August 25, and the settlement of the asset tax shall be done until August 25 of the next year,” the Finance minister explained.
The asset tax is not charged if the banking institutions report book loss at the end of the semester, ie at the end of the year for which the tax is due. The banking institutions under loan restrictions imposed by the National Bank of Romania do not pay the tax for the period in which the restriction is effective; also, the tax is not charged on institutions that have 100 percent met their lending growth target or the target for the reduction of the interest margin, or if their aggregate percentage of credit growth and interest rate reduction is at least 100 percent.
The Finance minister said that the amendments to Ordinance No. 114 had the approval of the National Bank of Romania, and the European Central Bank has been notified on this matter.
The tax on net financial assets will be charged according to the banks’ market share and will vary between 0.4 pct per year for institutions with a market share of 1 percent or higher, and 0.2 pct per year for those with a market share below 1 pct.
New taxpayers set up during the current year owe the asset tax beginning with the following year.
At the end of 2018 the government decided, through Emergency Ordinance 114, to tax the banks’ financial assets in the event of a ROBOR higher than 2 pct, a levy originally dubbed by the authorities the “greed tax”.
European Central Bank says Okays OUG 114 draft amendment
On Wednesday night, Teodorovici told private TV broadcaster Digi 24, that the draft amendment of the Government Emergency Ordinance (OUG) 114 has received the Okay of the National Bank of Romania (BNR) and the European Central Bank (ECB) which was asked for an opinion, says in turn it will Okay it, Romanian Public Finance Minister Eugen Teodorovici on Wednesday night told private TV broadcaster Digi 24.
He stressed that the formula regarding the use of a new reference indicator based on the inter-bank transactions is a formula already discussed with BNR.
“Take a look at the last months on what ROBOR (Inter-bank Offered Rate) meant for the quotations, what this new reference indicator based on inter-bank transactions means and then you’ll see the month-to-month difference, in the sense that the reference indicator on transactions is much lower. This is the formula we have discussed with the central bank (BNR). Mr. Vasilescu [Adrian Vasilescu, strategy consultant with the BNR, ed. n.] I wouldn’t know where he was, probably busy with something else. It is an opinion from the National Bank on this draft Ordinance in the gov’t sitting this week. It is agreed upon with the central bank, and it is sent to the European Central Bank for an opinion. Talks have been held with the Banks’ Association, at the Finance Ministry, yesterday [Tuesday, ed. n.]. We have an answer from the ECB: they approve this draft. They Okay it,” Teodorovici explained.
He underlined that in the ordinance amending OUG 114 are included the banking system, the mandatory private pension Pillar II, the communication side, the energy side and several others of technical importance.
“What has been agreed upon with each actor in the market, by my colleagues Mr. Minister Alexandru Petrescu [Communications and Information Society, ed. n.], Mr. Minister Anton Anton [Energy, ed. n.] and the other minister colleagues are all included in this OUG. There are ongoing talks, today and tomorrow as well. Tomorrow at 12:00 we are gathering in an Economic and Social Council (CES) meeting for opinions, as provided by the law. I don’t know the reason why all the time someone is trying to induce the idea that someone is hiding information. We cannot afford to do so, either I as Minister of Finance, or Mrs. Prime minister or other members of the Government. We hide nothing, we don’t manipulate figures,” Eugen Teodorovici highlighted.
The Finance minister also said that he received in black and white proposals from the ARB (Romanian Association of Banks, ed. n.), part of these proposals or observations being included in the draft piece of legislation, while for the others that were not taken into account, explanations were given.
“Not everybody has to be happy. I said we as a government start from what we have been pursuing to get through this Ordinance: to protect the interests of those in Romania, be they individuals, be they private companies with Romanian capital. This is the goal of the ordinance and it will be attained,” the Finance minister concluded.
“Amendments to Ordinance 114 based on BNR’s data, endorsed by BNR”
On the other hand, Teodorovici announced on Thursday after a meeting of the Economic and Social Council (CES) that amendments to the Ordinance 114 are based largely on the data submitted by the National Bank of Romania (BNR), an institution that has greenlighted the document in its current form.
“I can tell you clearly that today, ROBOR is at over 3pct, 3.23pct the 3M ROBOR. In transactions, the new benchmark is 2.60pct, a negative difference. We have very much based on what the National Bank of Romania sent to us as elements, data, arguments, justifications; it is the same document that the National Bank accepted, and I remind you that the ordinance, as it is today, is also endorsed by the bank. The rest is attempts by some to reignite a discussion that should not exist,” said Teodorovici.
Asked if the ROBOR Romanian Interbank Offer Rate calculations made by BNR should be made public, Teodorovici said “there is information being discussed and analysed by a working group” and that “they cannot go out publicly.”
Teodorovici added that there is currently no estimate of the number of people who will benefit from the new benchmark, calculated for future loans.
Interest on loans in the national currency will consist of a benchmark calculated exclusively on interbank transactions for a certain period to which the lender may add a certain fixed margin over the entire period of the contract, reads a draft emergency ordinance amending Ordinance 114/2018.