Supplementary turnover tax to cost Romanian banks some EUR 200 mln per year

The 2% supplementary turnover tax owed by Romanian banks will generate budget revenues of RON 1 billion (EUR 200 million) per year, according to estimates of the National Bank of Romania (BNR) included in the Financial Stability Report. This accounts for 1.5% of own funds.

For comparison, the expected impact of similar supplementary taxes is equivalent to 1.3% of bank equity in Italy, 1.7% of bank equity in Slovenia or 0.6% of bank equity in Spain.

The annualised return on equity (ROE) for the Romanian banking system was 21.25% in January-September 2023. ROE exceeded 10% since 2015 after the banks incurred losses for several years after the 2008-2009 credit crunch.

Although the magnitude of the new tax might not seem major at this time, it is permanent while the banking system's profitability may not be, BNR points out. Furthermore, the smaller banks with lower profitability, in general, will be particularly hit by the supplementary taxation.

"Although the annual impact on own funds of the measure imposed in Romania is comparable, the permanent nature of the domestic tax makes it more burdensome, considering the uncertain prospects regarding the ability of some banks to obtain profit in the future. In addition, the applicability of the additional bank tax also covers loss-making banks, which hold 0.4% of banking assets," reads BNR's report, quoted by Ziarul Financiar.

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