Romania's Govt. gives firms more time to pay their taxes and money to pay employees

The Romanian Government’s emergency ordinance (OUG) 29/2020 on supporting local businesses in the context of the crisis caused by the new coronavirus was published in the Official Gazette no. 230 of March 21, 2020, along with OUG 30/2020 that amends existing regulations to bring them in line with the current conditions.

Essentially, OUG 29 allows firms and individuals to pay their dues to the state budget with a delay (30 days after the expiry of the state of emergency) and extends state guarantees for bank loans needed by small and medium enterprises for working capital and investments, local Mediafax reported.

The only provision that generates immediate expenditures from the public budget is the one by which the Government has decided to cover the technical unemployment benefits on behalf of the companies who send their employees home and suspend their activity due to the restrictions imposed by the authorities for limiting the coronavirus outbreak or because of financial problems caused by the Covid-19 crisis (revenues in March dropping by at least 25% compared to the average revenues of january-February). However, the OUG is more restrictive compared to the draft discussed as the Government will cover the technical unemployment costs for only 75% of the employees of a company and only up to 75% of the country-wide average gross wage - and not all employees as initially understood.

The Government will also offer state guarantees to companies that take loans for investments or working capital and cover the interest costs, but there are limitations to this measure as well.

Economy minister Virgil Popescu announced on Sunday that he is already working together with finance minister Florin Citu on a second set of economic measures to face the new challenges and that a fiscal relaxation is needed to cope with the new challenges.

“The losses in the economy will be very high. There is no longer the problem of the deficit. If the crisis ends in two months, we will probably go up to 5% (of GDP), if it lasts 3-5 months, nothing can be estimated,” said Popescu, quoted by News.ro.

(Photo source: Shutterstock)