Romanian and foreign investors request again elimination of minimum turnover tax

  The minimum turnover tax is a barrier to investment, and in a period when the private sector is undergoing restructuring and layoffs, it adds additional pressure on companies, according to a letter signed by 14 investor organizations that once again request the elimination of the minimum tax."In view of the discussions on the construction of the state budget for 2026, the Romanian business community reiterates its firm call to decision-makers to eliminate the minimum turnover tax (IMCA). In a complicated macroeconomic and budgetary context and a tense geopolitical climate, IMCA represents one of the main barriers to investment, contrary to Romania's declared objective of attracting capital for economic development. In a period in which the private sector is undergoing restructuring and layoffs, maintaining IMCA adds additional pressure on companies trying to sustain their activity and preserve jobs," the cited document states.According to business community representatives, at the level of fiscal policy, taxation based on turnover regardless of the existence of profit goes against basic economic principles, not being used in any of the developed countries of the European Union. The measure ignores sectoral realities and economic cyclicality, reducing the appetite for major, long-term investments, especially in greenfield projects. Romania needs high-value-added investments, jobs and know-how transfer, not a deterrent to productive capital, emphasize Romanian and foreign investor organizations."Romania's attractiveness for investors is already decreasing, while other countries in the region, such as Poland, the Czech Republic or Bulgaria, are chosen as an investment destination to the detriment of Romania. By comparing the level of taxation in these countries, although in some places it could be considered that Romania has a lower taxation (given the corporate tax rate of 16%), taking into account the IMCA, companies charge a higher effective rate of tax on profit, which can even reach 90% in some situations. Moreover, new investors will not be willing to come to Romania to pay tax even in years when they record losses. Under the conditions in which Romania must integrate into European value chains and contribute to the common effort to increase economic competitiveness and defense capacity, maintaining the IMCA means, of course, "in fact, a missed strategic opportunity," the cited document reads.Investors complain that the minimum turnover tax disproportionately affects companies with low profit margins, discourages investment and undermines the competitiveness of the Romanian economy compared to all countries in the region. Being applied cumulatively throughout the entire production and distribution chain, this type of tax generates market distortions and fuels inflation. In the medium term, in the context of the economic slowdown, maintaining the IMCA risks eliminating many companies from the market, reducing the tax base and affecting the collection of budget revenues, through negative effects on investment, productivity and business development in Romania, they say.The organizations present, in a press release, the results of a survey conducted in the business community that shows the concrete impact of the IMCA. Thus, out of 80 companies that responded, 55 declared that they were directly affected, with an impact in multiple economic sectors. 64% of companies postponed, reduced or reconsidered investment plans once the IMCA was introduced and approximately 60% reported a major impact on operations through effects on the amounts available for investments, prices, supply chains, personnel policies and restructuring."The extension of the application of a measure initially introduced as a temporary measure, in the absence of real structural reforms to combat large-scale tax evasion, digitalization, improving voluntary compliance, or restructuring and streamlining public spending, is deeply unfair to the economic environment. Therefore, we once again call on decision-makers to eliminate this discriminatory tax and to build the state budget for 2026 on the basis of a coherent, predictable and well-founded fiscal framework, avoiding ad-hoc or insufficiently tested solutions that generate instability. A solid fiscal architecture, aligned with economic principles and European practices, that encourages investment and competitiveness, benefits the entire economy and creates a climate of trust for long-term investments in Romania," the statement added.The 14 organizations that signed this document are: AHK - Romanian-German Chamber of Commerce and Industry, AMCHAM - American Chamber of Commerce in Romania, AOAR - Association of Businessmen in Romania, BRCC - British-Romanian Chamber of Commerce, BEROCC - Belgian-Luxembourg-Romanian-Moldovan Chamber of Commerce, CONCORDIA - Concordia Employers' Confederation, CCIBRP - Romanian-Portuguese Bilateral Chamber of Commerce and Industry, CCIFER - French Chamber of Commerce, Industry and Agriculture in Romania, CCIpR - Italian Chamber of Commerce in Romania, CCE-R - Swiss-Romanian Chamber of Commerce, FIC - Foreign Investors Council, HRCC - Greek-Romanian Bilateral Chamber of Commerce, NRCC - Dutch Chamber of Commerce in Romania and RBL - Romanian Business Leaders Foundation.By Law no. 296/2023, the IMCA was introduced for taxpayers who registered a turnover of over 50 million euros in the previous year and whose profit tax is lower than the minimum tax of 1% on turnover. They are obliged to pay profit tax at the level of the minimum turnover tax.