The Foreign Investors Council (FIC) believes that in the current geopolitical and economic context, fiscal stability and predictability are absolutely necessary attributes to build a relationship of trust between taxpayers and public policymakers. Failure to comply with proper timelines for public consultation in the legislative process is a negative signal that increases the degree of uncertainty for the future of investments in Romania, reveals an FIC release.
The adoption of the emergency ordinance introducing a new tax amnesty did not provide the necessary time for a thorough analysis and for preparing position papers on behalf of the business environment. Romania has been in a difficult budgetary context since 2019, and FIC has drawn attention since the beginning of 2024 to the need of a balanced approach from the authorities to ensure that the deficit target assumed for this year is maintained. Thus, a consultation period of less than 24 hours is not justified for the adoption of this normative act.
The FIC reiterates the need to set medium-long term applicable principles and guidelines that ensure coherence in the field of fiscal policies, that also encourages a voluntary compliance and supports the diligent and transparent conduct of taxpayers who pay their obligations to the state budget. The Romanian Government has resorted to general or specific tax amnesties several times in recent years, with the argued purpose of increasing budget revenue collection. These measures did not have a clear assessment, no studies were published on the budgetary impact at the time, nor reports on the past impact of this type of measure on the process of collecting budgetary debts were presented.
In this context, we consider that, although the tax amnesty may have certain short-term benefits in the case of tax collection, in the medium and long term it discourages voluntary compliance and brings uncertainties for good-faith taxpayers and, implicitly, could negatively affect the degree of revenue collection to the state budget. Repeated tax amnesties, that are not based on well-founded and transparent policies, can discourage voluntary compliance, which is one of the objectives assumed at the level of fiscal policy.
The FIC recommends that Romanian fiscal policies should focus on reward mechanisms and actions that stimulate the good faith conduct of taxpayers who pay their taxes on time, correctly, and not to reward those who do not meet their tax obligations. In less than a year, the Romanian Government has gone from excessive sanctioning measures to excessive leniency measures. On the one hand, severe fines are introduced for administrative errors (in the case of RO e-Invoice and RO e-Transport) even if there were no losses in budget revenue, but accessory measures for taxpayers who did not submit their tax returns and/or did not pay on time are being canceled.
It is also vital that the measures taken by the Romanian State for the benefit of debtors should take into account the conduct of taxpayers, so as to underline the commitment of the Romanian Government to support companies in difficulty, but also to the firm and sustained sanctioning of tax non-compliance. In this respect, a tax amnesty’s applicability should be conditional on the evolution of the conduct of taxpayers who have accessed the latest similar measures and have benefited from the cancellation of auxiliary tax liabilities or be revocable if the taxpayers who benefit from this measure do not demonstrate an improved conduct over a period of at least 3 to 5 years.
FIC believes that a new tax amnesty for Romania could bring immediate income but would deepen the problems in the long term. Instead of resorting to such temporary solutions, Romania must focus on structural reforms to increase revenue collection and reduce tax evasion. A stable, fair and well-administered tax system is essential for sustainable economic development.
FIC members express their willingness to collaborate with the authorities to identify the best solutions to increase tax compliance and set healthy fiscal principles that lead to long-term economic development and, implicitly, to the collection of more state revenues. But, in order to be able to contribute effectively to the Government’s collection efforts, we need to have available legal consultation periods so that we can be a real part of the debates.
