Radio România Internațional

Tag: business environment

  • Proposals to amend the Fiscal Code

    Proposals to amend the Fiscal Code

    The Romanian government has analysed, in a first reading, the bill on the modification of the Fiscal Code, which provides for a number of measures which, they believe, will benefit the business environment. Among these measures is the proposal to reduce the income tax to 10% for certain categories of incomes. The government has also discussed several ordinances, which stipulate, among other things, an increase in the minimum gross salary and the reduction of employees contribution to the privately managed pension fund known as Pillar 2.


    The finance minister Ionuţ Mişa has presented the fiscal measures that the government intends to take next year.



    “We intend to cut income tax from 16% to 10% and to also reduce social security contributions, whose payment will become the responsibility of employees. Social security contributions will drop by 2%. The contributions to be paid by employers will also be reduced to 2.25% and will cover the payment of unemployment risk, hazards, medical leave and salary debts.”



    The labour minister Lia Olguţa Vasilescu has announced the governments intention to increase, as of January 1, the minimum gross salary to more than 400 euros. At present, over one million Romanian employees, that is one fifth of the total number of employees, earn the minimum salary. According to the labour minister, the minimum pension and the child-rearing allowance will also be increased.



    “The minimum child-rearing allowance will increase as of January 2018 to 1,250 lei as compared to 1,233 lei at present. The minimum pension will increase to 640 lei and the pension point will go up to 1,100 lei as of July 1, 2018.”



    Minister Vasilescu has also added that the amount to be paid to Pillar 2 will drop from 5.1% to 3.7%. The pension funds Pillar 2 has caused a lot of debates this year, despite the Social Democrats constantly denying rumours that they plan to nationalise this fund. Analysts say the Bucharest Stock Exchange will be most affected by the reduction of Pillar 2 contributions because they will no longer have money for purchasing shares.



    In another development, a survey conducted last month among the members of the Foreign Investors Council has shown that the investors sentiment regarding Romanias business environment is considerably deteriorating, especially as regards legislative predictability and the stability of the fiscal framework. 90% of the respondents said the permanently changing legislation affected the planning of their business. 65% claim the tax burden has increased and 3 quarters believe the business environment has recently deteriorated and that the latest developments have led to a drop in companies trust. The Foreign Investors Council says the authorities should develop a more coherent policy meant to attract direct foreign investments and make the area of fiscal policy more predictable.

  • December 28, 2016 UPDATE

    December 28, 2016 UPDATE

    NOMINATION – Sorin Grindeanu is the new nomination for the position of Prime Minister made by the coalition of the Social Democratic Party and the Alliance of Liberals and Democrats, which hold the majority in Parliament. The announcement was made on Wednesday by the Social-Democrat leader Liviu Dragnea, at the end of the meeting of the partys Executive Bureau. Aged 43, Sorin Grindeanu is a former Minister of Communications in the Government led by Victor Ponta and is the current president of the Timis County Council. The Social-Democrats proposal follows one day after President Klaus Iohannis rejected the nomination of Sevil Shhaideh for the office of Prime Minister. Liviu Dragnea said one of the options on the table is launching proceedings to have the president suspended, but the Social Democrats decided to make a new proposal for the position of Prime Minister in order to avert a political crisis. The interim president of the National Liberal Party in opposition, Raluca Turcan, sees the latest nomination as a last-resort, temporary solution.



    BUSINESS – The business environment will be worsening in Romania in the next 12 months, with the national currency, the Leu, dropping in value against the Euro. This is the conclusion of the latest poll run by the Romanian Association of internationally certified financial analysts. Tax consolidation, needed after salary hikes, tax cuts and the drop in the VAT, as well as the fact that Romania will no longer have the same economic growth, given that the peak of the economic cycle has already been reached, will have an effect on investment, the poll shows. At the same time, Romania is a small and open economy, affected by the macroeconomic worsening of conditions globally. At the same time, it is expected that the Leu will drop against the Euro in the next 12 months. The Association shows that the increase in interest rates in the US has caused a rearrangement of exchange rates in all emerging countries, depreciating the local currency. The Associations Romania Macroeconomic Confidence Indicator was launched in May 2011, representing the forecasts of financial analysts in terms of Romanian economic activity for a year.



    EARTHQUAKE – Romania has not sustained damage from the 5.3 magnitude earthquake that occurred on Wednesday night in the Vrancea seismic region, at a depth of around 100 km. The National Earth Physics Institute revised twice the magnitude after the quake, which was also felt in the south east of Romania, the Republic of Moldova, Bulgaria, and the west of Turkey. The last tremor of this size occurred on September 24, felt all across the country, as well as in the Republic of Moldova. According to the National Earth Physics Institute, the strongest earthquake in the last few years occurred on the 22nd of November, 2014, with a magnitude of 5.7 on the Richter scale.



    CRASH – The second black box of the Tupolev 154 Russian aircraft that crashed in the Black Sea has been found, the Russian Defense Ministry reports. The most likely cause of the crash was a fault in the flaps, the Russian press quotes investigators as saying. The Russian security services said there were no indications to support the possibility of a terrorist act. The aircraft had landed on Sunday at Sochi for refueling, after taking off from Shkalovski airport near Moscow, heading for Latakia, Syria. It vanished off radar screens after 20 minutes. 92 people were on board, 83 of them passengers, most of them members of the military orchestra Aleksandrov, along with a number of journalists. They were scheduled to hold a holiday show on the Syrian base at Khmeimim. There were no survivors.



    ARREST – The German authorities on Wednesday placed under pre-trial arrest a 40-year-old Tunisian national, suspected of having ties with Anis Amri, the alleged perpetrator of the December 19 attack in the German capital, which killed 12 people and wounded 50. According to the Federal Prosecutors Office, the attacker had the Tunisians phone number saved in his phone, which was telling of his involvement. Anis Amri was shot dead on December 23 by the Italian Police, in a train station in Milan. Sources close to the investigation say the alleged attacker drove to Milan via the Netherlands and France. We recall that a lorry ploughed into a crowd at a Christmas Market in Berlin, an attack claimed by the Islamic State terrorist organization.


    (Translated by C. Cotoiu and V. Palcu)