The Ministry of Finance could receive an additional 6.2 billion lei from the state budget due to the application of the minimum turnover tax, Daniel Angel, partner, coordinator of tax and legal services at PwC Romania, said on Friday.

“Of all the changes, the most important is the minimum sales tax, which you can see will have the biggest impact. This is the assessment I made together with my colleagues. Sales tax is a practice that is almost non-existent. in developed countries, precisely because the size of the turnover indirectly means the corresponding profit. The level of profit obviously differs from one sector of the economy to another, but also depends on the economic context. According to our estimates, you can see that there will be 756 companies entitled to pay this turnover tax, 20 of which are credit institutions, and 335 companies will continue to pay 16% income tax. The amount that we estimate the Ministry of Finance will collect additionally by applying this tax is 6.2 billion lei in addition to the state budget,” said Daniel Angel, quoted by Agerpres.

He noted that these estimates take into account only the balance sheet indicators of the companies, as they were published in 2022 on the website of the Ministry of Finance, and not the total revenues provided for by the draft law, which in certain situations can be even higher.

“That’s a picture, shall we say, of the impact that we have at least at this point, given the discussions in terms of the total revenues that we believe will be generated around this tax. The main sectors affected are the automotive energy sector, the tobacco sector, pharmaceuticals and construction. An important part of these companies already pay excessive taxes, for example in the oil and gas sector or electricity producers and suppliers. Companies in the automotive sector, as we know very well, have a significant contributor to Romania’s exports, with reduced profit margins or losses due to the global semiconductor crisis. For example, 27% of Romania’s exports are generated by the automotive industry. The construction sector, as we also know, was the largest contributor to real gross domestic product growth in 2022 as a result of infrastructure investment, but in the second quarter of 2023 we are already seeing a slowdown, particularly in the housing sector. It’s no surprise that many of these companies are also regulated, whether we’re talking about energy or pharmaceuticals, and obviously we can say that these things are coming to change the rules of the game during the game,” said Daniel Angel .

According to a representative of the consulting company, the sales tax, as well as the expected consequences, will still slow down the pace of economic growth in conditions of instability. This hinders investments, especially those made by companies in the short and medium term.

“Although at first glance we can say that the turnover tax may seem, at least from the budgetary point of view, to be an attractive tool, however, this measure may have the opposite effect, namely the migration of the activities of some companies to other states or the postponement. And this is in the context of that in the last 2 years, Romania has had record figures in terms of foreign direct investment, somewhere around 9-10 billion euros per year, and we have just become attractive to foreign investors again. We hope it will stay that way. Because, as you well know, these changes were unfortunately not accompanied by an impact, cost and benefit analysis. That’s why we tried to do simulations at least for sales tax. This will certainly create inflationary pressures by shifting costs to end consumers. Last but not least, we believe that this will reduce Romania’s competitiveness and affect exports. This is not surprising. We will become more expensive and, as such, less attractive, with a potential effect on the trade balance, which we hope will not become deficit again. In conclusion, Romania has a difficult budget situation, but we believe that raising taxes should not have been the only solution,” said Daniel Angel.

According to him, we have a fee that puts us, unfortunately, at the bottom of the rating in the European Union.

“And yes, we support and have always supported everything that the PNRR regulations mean. They were needed. They are necessary precisely for fiscal justice, precisely for the expansion of the tax base, with fewer exemptions, exemptions and exemptions. But obviously we are not. But since hope is the last to die, I hope that the institution of dialogue and real consultation between the authorities and the business environment will once again find its place in our agendas and that such fiscal initiatives will be the first to be discussed with specialists , carry out a thorough impact analysis and then adopt, because clearly no one is benefiting from a lack of consultation. And if we sow uncertainty, we will definitely not reap sustainable development and growth,” said Daniel Angel.