RO Govt. to cut tax on financial assets and abandon plans for sovereign investment fund

Romania’s Government will eliminate several taxes currently provisioned under emergency ordinance (OUG) 114/2018, such as the tax on financial assets (the so-called bank tax), while the Sovereign Investment Fund will be abolished, said finance minister, Florin Cîțu, quoted by Mediafax.

Romanian banks paid RON 379 million (EUR 80 mln) for the first half of the year as tax on financial assets (the “greed tax” introduced by the previous Government about a year ago), while the profit tax was nearly three times higher: RON 1.25 billion (over EUR 260 mln).

Under the revised form, banks can avoid the tax on financial assets if they lend above a certain benchmark or narrow the net interest margin by more than a certain amount.

“We have already announced some measures for changing OUG 114/2018: eliminating the bank tax, waiving those capital requirements for the managers of second pillar pension funds. As for the energy tax, there is a gradual process. The minimum wage in construction remains in place. We also eliminate the income tax in the telecommunication sector. We are trying to eliminate all the harmful elements of OUG 114/2018. Tonight [December 10], it is a first reading [of the budget planning], and the decision will be taken this week in another Government meeting,” Citu told Digi 24.

He also said that the Sovereign Investment Fund is unconstitutional.

“The Sovereign Investment Fund will vanish by dismantling the elements of OUG 114/2018. It was not a constitutional one, there are problems of constitutionality and it does not fit the model of a modern investment fund. It has never worked in Romania, so it is not a loss. We also eliminate the subjective decisions, because in the first two years, the managers of this Fund were supposed to be appointed by the finance minister,” he explained.

(Photo: Octav Ganea/ Inquam Photos)