Tax amnesty, public spending cuts have a positive budgetary impact of RON 9 billion

The Romanian government has approved a series of measures to improve the collection of tax arrears and to better use public funds for outlays in the area of public services, as well as a series of measures to back the investment projects carried out by central and local public administrations based on projects financed from external funds, Finance Minister Marcel Bolos said on Wednesday after a government meeting."It is an extremely complex package of measures that, on the one hand, concerns the business community and, on the other hand, the government's public expenditures for a better use of funds and support for the necessary investment expenditures in this period of time in which Romania is accessing the investment budgets under the National Recovery and Resilience Plan and the Cohesion Policy," said the minister.He added that tax incentives are divided into two categories."For the taxpayers paying their rates and taxes on schedule (...) there is a bonus of 3% of the corporate income tax due and paid or the microenterprise income tax, as the case may be, automatically granted. That means that, by decision of the National Tax Administration Agency (ANAF), the bonus will be automatically granted and it can be used toward paying rates and taxes in 2025 or for offsetting related charges or other debts to the national budget, as the case may be. It is a sign of respect for taxpayers paying their rates and taxes on time and, at the same time, an initiative that has been approved by the government to boost voluntary compliance, which is the most natural and normal step in improving the collection of tax arrears."A second category of measures concerns taxpayers with outstanding debts as of August 31, 2024. In their case, interest, late payment penalties and non-declaration penalties related to such debts have been cancelled, pending the settlement of the debts by November 25, 2024."We are talking about 330,000 legal entity taxpayers with an outstanding debt of RON 32.4 billion, and 848,000 individual taxpayers with outstanding debts of RON 39.2 billion as of August 31, 2024. It should be mentioned that this includes both the amounts from the criminal sentences for which this tax incentive does not apply, on the one hand, and also the amounts regarding the extended liability of the administrators, to the tune of RON 24.7 billion. (...) In the case of tax arrears of up to RON 5,000, related charges are fully cancelled and so is 50% of the arrears. If the debt exceeds RON 5,000, then 25% of the main debt is written off."Bolos said the measure concerns the 848,000 individual taxpayers, adding that it is designed to improve collection of outstanding tax arrears while supporting the business community, which faces difficulties in terms of their business."The second part of the measures is designed to make better use of the public funds allocated for various public services. Local public administrations are not included (...). Therefore, the town halls, the county councils can continue to implement their investment plans and activities to ensure public services under normal circumstances. Moreover, to support local public administrations and the investment projects they implement, the size of loans they can take out from the state treasury for the implementation of investment projects was increased to RON 2 billion (...) At the same time, a category of special loans for the local public administrations from the state treasury has been supplemented by RON 1.5 billion. Also, the part of pre-financing from European funds, granting the necessary pre-financing for investment projects, increased to 30%. In other words, it is a measure to make the use of European funds more flexible and to facilitate the implementation of investment projects."On the public spending side, material expenditures and spending on services by state authorities and public institutions have been capped."The caps concern the average spending between January and August 2024. Also, only for investment projects financed from the national budget - with the exclusion of town halls, local councils and county councils - the investment component of central public administrations and institutions is capped at the level of the average monthly spending recorded in January-August 2024. Also, throughout the remaining of the year, no spending on consultancy and expertise, professional training, office supplies and all these expenses related to the administrative activity will be allowed. The payment in installments of the expenses of the judicial system over five years was approved and we also have a set of measures to make the replenishment of the budgetary reserve fund more flexible, so that the state's operating expenses with public services at national level can be secured."The minister added that the measures designed to improve the collection of tax arrears could generate RON 7.9 billion, and the better use of the funds allocated for spending on public services would add RON 1 billion more."It is very important to note that this careful and prudent monitoring of the government deficit is a very important objective for Romania, as the government deficit at the end of 2024 is the starting point in adjusting the government deficit in the structural fiscal plan," Bolos concluded (EUR 1 = RON 4.97)