Romania’s Government adopted on Friday evening an emergency ordinance that brings new taxes for banks, energy companies and telecoms and changes the functioning of the mandatory private pension funds (Pillar II). The ruling coalition made of the Social Democratic Party (PSD) and Alliance of Liberals and Democrats (ALDE) introduced these fiscal changes almost overnight, without any prior consultation with the business environment.
Finance minister Eugen Teodorovici announced the proposed changes on Tuesday evening and, the next day, the Bucharest Stock Exchange’s main index crashed by 11%, its biggest daily decline after the 2008-2009 financial crisis. Large companies and business organizations representing both Romanian and foreign investors came with a joint message against the proposed changes, but the Government chose to ignore them and move on with its measures, which will enter into force in January 2019 and will strongly impact the budgets and future plans of companies operating in Romania.
The changes enforced by the Government’s emergency ordinance include a tax on bank assets, tied to the interbank interest rate (ROBOR) and special turnover taxes on energy and telecom companies. The ordinance was also supposed to allow contributors to mandatory private pension funds (Pillar II) to take out their money and invest them in other instruments, but this provision was removed.
