Radio România Internațional

Tag: tax evasion

  • MPs endorse measures to combat tax evasion

    MPs endorse measures to combat tax evasion


    Romanian journalists have been writing for years that, in the private sector, tax evasion is quasi-generalized. According to experts, its extent is difficult to quantify, but Romania is among the first in Europe. Car mechanics or plumbers who work illegally. Minibus drivers who collect money from passengers but do not issue tickets. IT workers paid thousands of euros per month, but with a contract of employment on the minimum wage in the economy. Construction companies that collect from beneficiaries triple amounts compared to those registered in documents.



    For many years also, all kinds of new characters appear at the head of the National Fiscal Administration Authority (ANAF), and promise, without exception, higher collections to the state budget, but fail to reach their assumed targets and are replaced by others, which continue the spiral of unfulfilled promises. However, the insufficient budget collections are the favorite excuse of all governments, right-wing or left-wing, single-color or coalition, for not making bigger investments in infrastructure and for not increasing pensions or salaries. On Tuesday, the Bucharest Chamber of Deputies adopted a set of additional measures to combat tax evasion. There were 182 votes for, 80 against and two abstentions for this draft law, initiated by the leaders of the government coalition, the Social Democrat Marcel Ciolacu and the Liberal Nicolae Ciucă, i.e. the current prime minister and his predecessor. Among other things, non-withholding of taxes and contributions, accounting documents for fictitious expenses, the execution of double accounting records or the use of cash registers that are not connected to the National Control Information System will be considered crimes.



    Depending on the seriousness of the offense, the punishments provided by the new normative act range between one and ten years in prison and are tougher for tax-evaders whove done it before. There is, however, the possibility of not getting punished if, for example, the damage does not exceed one million euros and its value increased by 15%, plus interest and penalties, is actually paid in full. In this situation, the competent bodies will not notify the criminal investigation bodies.



    From the opposition, the Save Romania Union (USR) deputy Stelian Ion, former Minister of Justice, claims that, through such provisions, the PSD-PNL coalition Government is only decriminalizing tax evasion. The accusations were rejected by the vice-leader of the National Liberal Party (PNL) group in the Chamber, Florin Roman, who accuses “a lot of nervousness among USR colleagues, that the fight against tax evasion is starting”. If it is not challenged at the Constitutional Court, the bill adopted by the Chamber of Deputies, as the decision-making body, will go to President Klaus Iohannis for promulgation. (MI)


  • December 20, 2023

    December 20, 2023

    Budget – The Romanian Parliament meets today in a joint session to debate and vote on the state budget and the state social insurance budget, supported by the government majority made up of the Social Democratic Party — PSD and the Liberal Party – PNL. The social-democratic PM Marcel Ciolacu argued that the budget for next year is one of development and balance, a budget based on investments and which provides the necessary sums for the promised pension and salary increases. The opposition says that the budget is built on unrealistic figures, which will not ensure economic development.



    Evasion — The Romanian Chamber of Deputies adopted new measures to combat tax evasion. Failure to withhold taxes and contributions, the accounting documents for fictitious expenses, keeping double accounting records or the use of cash registers that are not connected to the National Information Control System will be considered crimes. Punishments, which range from one to ten years in prison, are harsher for repeat offenders.



    Timisoara – The western Romanian city of Timişoara marks today 34 years since it declared itself the first city free of communism in Romania. To celebrate the victory against communism, several events are taking place today, including screenings of short films and documentaries, as well as a marathon tour at the Brâncuşi exhibition at the Art Museum. 34 years ago, after the bloody repression of the uprising that started on December 17, the big factories went on strike, and the workers lined up and gathered in the center of the city. In front of the crowd, the army withdrew to the barracks, the people arrested were released and the Romanian Democratic Front was established. Started in Timisoara, the people’s revolt against the regime led by the dictator Nicolae Ceauşescu extended to several cities of the country. In the violent events that took place then, over 1,000 people lost their lives and around 3,000 were injured.



    Energy – The European Union extended several measures that should ensure the stability of energy prices and the supply of consumers. The European Commission says that the decision was made even if the member states have stored enough natural gas to avoid problems over the winter. The first measure refers to energy solidarity between EU countries, the second aims to shorten the deadlines for the approval of renewable projects, and the third imposes a temporary mechanism to correct possible high gas prices. The Commissioner for Energy, Kadri Simson, said that the measures are taken preventively and that the market is currently stable.



    Odorhei – The administrator of the company that was undertaking works on the foundation of the boarding school in Odorheiu Secuiesc (central Romania), where the collapse of a wall on Sunday resulted in the death of a 17-year-old student and the injury of three others, was detained, on Tuesday, for 24 hours. He is being investigated for the crimes of manslaughter and bodily injury. The Prefect’s Office and the Education Ministry also ordered the start of investigations in the case of the building that housed almost 100 students, owned by the Roman Catholic Archdiocese of Alba Iulia and rented by the local public authority. The doctors are reticent regarding one of the victims, a 17-year-old student, seriously injured. She is in Intensive Care in critical condition. The other two injured girls are now better and will receive psychological counseling.



    Gaza – The UN Security Council postponed, again, for today, the vote on a new resolution on the war in Gaza, at the request of the US, dpa reports. The draft resolution presented by the United Arab Emirates calls for the suspension of hostilities in the Gaza Strip to facilitate more deliveries of humanitarian aid. Previously, several resolutions calling for a ceasefire failed in the UN Security Council, because the US opposed it. So far, the Council has adopted only one resolution with a humanitarian focus, a few weeks ago. On the ground, the Hamas terrorists resumed rocket launches from the Gaza Strip at Israeli targets. On the other hand, the Palestinian death toll reported in Gaza since the outbreak of hostilities in October has risen to 20,000. We remind you that the war broke out after the attack committed by Hamas against Israel, resulting in over 1,200 deaths, mostly civilians, and hundreds of kidnappings. (LS)


  • September 25, 2023

    September 25, 2023

    POLL According
    to a poll conducted by the Center of Urban and Regional Sociology, (CURS) most
    of the Romanians believe that things are rather going wrong in Romania. 69% of
    the respondents share this opinion, whereas only 22% of them believe the
    country goes in the right direction. 41% of those questioned believe their
    situation will be more difficult next year, 38% that it will remain the same whereas
    18% says that things will improve. According to the CURS poll, the main issues
    the Romanians are presently facing are the inflation, the higher prices and their
    low incomes, the dropping standard of living, corruption and theft. The most
    trusted institutions remain the firefighters (73%) followed by the army (68%)
    and the church (63%). If elections were to take place next Sunday, 50% of the
    interviewees would be voting for the parties presently ruling Romania, the PSD
    and PNL.




    FESTIVAL The concert of the Concertgebouw Royal
    Orchestra of Amsterdam on Sunday night ended the 26th edition of the
    George Enescu International Music Festival. The Academic Radio Choir and the
    Children Radio Choir have also participated in the aforementioned event, which
    brought together over 40 orchestras from 16 countries and over 35 hundred of
    the world’s most renowned musicians. This festival, one of the world’s most
    important, will be followed by Remember Enescu, a contest devoted to the young
    musicians. This year’s edition kicks of on Monday in Timisoara, western
    Romania.




    IMF A team of the International Monetary Fund comes to
    Bucharest today for the annual round of talks over the Romanian economy. Until
    October 4th, international experts will be holding talks on the
    economic policies and the latest developments in the field with representatives
    of the Finance Ministry, the Central Bank and various NGOs. The IMF team will
    also be meeting representatives of the private sector for talks, which are
    taking place periodically in all member states with a view to presenting
    recommendations for ensuring stability and a positive development at the level
    of the economy.




    LAWS The completion of the measure package aimed
    at balancing the state budget will be preceded today by a new round of talks in
    Bucharest between Prime Minister Marcel Ciolacu and Finance Minister Marcel
    Bolos followed by another round of consultation with employers associations and
    trade unions on the matter. Also today, the Executive is to endorse a draft law
    for which it will assume responsibility in Parliament. The government’s
    intention is to effectively combat tax evasion, ensure fiscal equity and curb
    red tape. The VAT will remain low for a series of products and goods – 5% for
    firewood, thermal energy, natural gas and other things related to household
    consumption. The VAT will stay at 9% for food stuff and medicine, whereas
    products destined for people with abilities will remain exempted from the VAT.
    Holiday vouchers will be given only to state employees with incomes up to 16
    hundred euros.


    (bill)

  • September 21, 2023 UPDATE

    September 21, 2023 UPDATE


    UN – The
    extended Black Sea region must be protected against the fallout from Russia’s
    war in Ukraine, Romania’s president Klaus Iohannis said on the sidelines of the
    UN General Assembly. Romania will not abandon its most vulnerable partners, the
    president said, referring to the transit of Ukrainian grain on Romanian
    territory, a topic he also tackled jointly with the president of Ukraine,
    Volodymyr Zelenskyy, the European Commission president, Ursula von der Leyen,
    and the Bulgarian Deputy Prime Minister, Mariya Gabriel. On Thursday, the head of state gave a speech on the sidelines
    of the World Leaders Forum on Romania’s perspectives on the war in Ukraine and
    its impact on Black Sea Security, in an event hosted by University of Columbia
    in New York. Russia expected a weak international community before attacking
    Ukraine, but its assumption was wrong, president Iohannis said, adding that
    NATO has made historic decisions to strengthen defense and deterrence on the
    Eastern Flank and the Black Sea. The president also pointed out that the Black
    Sea has been irrevocably confirmed as a region of strategic importance for
    Euro-Atlantic security, and now everyone understands that what happens in the Black
    Sea doesn’t stay in the Black Sea.



    LAW PACKAGE – The Cabinet had
    a first discussion on the set of measures aimed at the long-term rebalancing of
    the state budget and at facilitating the absorption of tens of billions in EU
    funding. Apart from cutting down public spending, the bill focuses on fighting
    tax evasion, introduces taxes on large profits and wealth, and eliminates tax
    privileges. Ahead of the Cabinet meeting, the measures were discussed in the
    three-party Social Dialogue Council, which brings together government officials
    and representatives of employer associations and trade unions.




    OPINION – The Economic and Social
    Committee (CES) has issued a negative opinion with respect to a draft emergency
    decree of the Romanian government stipulating the introduction of new taxes,
    increasing existing ones and eliminating certain tax breaks. CES
    representatives claim the decree produces unpredictability in the field of
    fiscal legislation, adding that the budget deficit should be solved through an
    efficient management of public revenues.




    ACCIDENT – A criminal investigation
    was initiated with respect to the blast that occurred on Wednesday night on a
    gas pipeline on the Moldova Motorway construction site in eastern Romania, in
    which four people died and 5 others were injured. Two men with burn wounds
    affecting 30% and 40% of their bodies, respectively, were transferred to
    hospitals in Bucharest. Prosecutors are investigating manslaughter and bodily
    harm offences, as well as failure to take or observe work safety measures.
    According to the Vrancea Emergency Inspectorate, the blast was caused by the
    construction works conducted in the vicinity of the pipeline, which was also
    carrying natural gas to the neighboring Republic of Moldova.




    CORRUPTION – Two known
    thoracic surgeons with the Marius Nasta Institute in Bucharest were detained
    for bribe taking, while another six physicians, mostly anesthesiologists, were
    placed under pre-trial arrest. According to investigators, several physicians
    with the Marius Nasta Institute have been repeatedly receiving money and others
    goods from patients in the last year. Investigators have seized mobile and
    immobile property from the said physicians and froze their bank accounts, after
    noticing significant differences between their legal revenues and actual
    profits in the last 5 years. The total value of assets frozen by prosecutors
    stands at over 800 thousand EUR.




    GRAIN – Thursday saw the first
    naval transport of Ukrainian grain to arrive in Istanbul since Russian withdrew
    with the grain transit agreement in the Black Sea. Carrying 3,000 tons of grain
    for Israel, the ship left Chernomorsk on Tuesday and used a route off the
    Romanian and Bulgaria Black Sea coasts, which Kyiv has labeled a safe corridor.
    Ukraine announced a second grain cargo will be headed to Egypt. (VP)



  • Concerns regarding budget revenues

    Concerns regarding budget revenues

    The Finance Ministry in Bucharest is considering a possible amendment of the Fiscal Code, after PSD and PNL in the ruling coalition agreed to improve revenue collection by reconfiguring the current fiscal framework. The Social-Democrats support a gradual rollback to progressive taxation, whereas the Liberals support the flat tax, which they are unwilling to give up. What is certain is that both parties said there wont be additional taxes introduced. Prime Minister Nicolae Ciucă says the Liberals support the flat tax, as stipulated in the governing program.



    “This year we wont modify the taxation system, rather we will try to streamline it. I dont believe the timing is right to speak about new taxes, considering the current state of affair.”



    In turn, PSD leader Marcel Ciolacu gave assurances that there wont be any increases in taxes, supporting instead a gradual return to progressive taxation, similar to other systems in Western Europe.



    “Theres wont be any new taxes. We will try to optimize the taxing system within two weeks at the most. The Finance Minister will make propositions and submit analyses, especially from external financial auditors. We will make a decision for next year at the level of the ruling coalition.”



    From the opposition, USR interim president, Cătălin Drulă, claims that, instead of lowering budget expenditure, PSD and PNL want to increase taxes and introduce progressive taxation, which USR sees as an additional burden on companies. Analysts, in turn, claim that the state needs to improve its revenue collection system, while increasing and adding new taxes should be a last resort. University lecturer Ionuţ Dumitru, a former president of the Fiscal Council, told Radio Romania.



    “Right now, we dont need any increases in taxes, given the current economic slowdown. Increasing taxes right now would be a procyclical measure. We believe that the first and fair step would be to deal with tax evasion and get rid of tax optimization. Increasing taxes is the last thing a government should do. It makes no sense to discuss tax hikes when the government isnt even able to collect the taxes it is due”.



    In this context, the National Fiscal Authority has intensified its inspections in economic areas with a high fiscal risk in order to curb tax evasion. Despite all measures taken by successive governments, revenue collection accounts for merely 27% of GDP, against a European average of 40%. This rate has not exceeded 31% in the last 32 years. (VP)




  • Corruption and tax evasion

    Corruption and tax evasion

    Over December 5 and 9, on the occasion of the International Anticorruption Day, celebrated on December 9, a special action entitled “The Anticorruption week at the borders” is unfolding in Romania. Responsible behaviour and the elimination of risks related to acts of corruption, raising the awareness of the citizens who cross Romania’s borders with Ukraine and the Republic of Moldova are some of the requirements made by the National Anti-Corruption Directorate in this period of time. Until Friday, December 9, citizens of the three countries and other tourists who cross the border into Romania, at the checkpoints in Sighet, Halmeu, Galati, Oancea, Albita, Siret and Otopeni Airport, will receive leaflets, brochures and recommendations from representatives of the Anti-corruption Directorate, of the Border Police and from volunteers, to have a decent behaviour and a pro-active attitude and make notifications and signal acts of corruption.



    The slogan of the program is: Corruption does not cross the border here! Participating in the campaign will also be, as volunteers, students from the border towns and communes, together with which the National-Anticorruption Directorate has signed a protocol of collaboration, under the motto “Youngsters against corruption!” The measures meant to prevent and fight corruption at the border are actually intensely brought into the focus of attention, the more so as Romania has applied for Schengen accession for many years now. Whether Bucharest authorities say there are no objective and technical reasons for Romania not to join the free movement area, a political decision, reached by consensus, and favourable to Romania, is still pending.



    The main objection levelled by some EU partners is precisely the high level of corruption. Joining the Schengen area entails the elimination of controls at the EU’s internal borders, in the member states which fully apply the Schengen acquis, only one external border being thus created, where controls are made according to a clear set of rules, relative to visas, migration, asylum, as well as measures referring to police, judicial and customs cooperation.



    Concurrently with the anticorruption measures taken at the borders in the month of December, inspectors of the National Fiscal Administration Agency, ANAF, will make extensive control operations at companies whose activity is intensifying ahead of the winter holidays. They will mainly monitor the flows of goods purchased from other EU member states or imported from other countries, in an effort to identify the risks generated by the fiscal behaviour of the consignees mentioned in the customs and transport papers, as well as in the support documents. All throughout December, ANAF will organise tens of bids to sell goods and properties, to recover the sums of money set by final court rulings.


    (Translated by Diana Vijeu)

  • The IMF and the fight against tax evasion

    The IMF and the fight against tax evasion

    Finance ministers from the G20 leading economies who gathered in Washington DC last week for the spring meetings of the International Monetary Fund and the World Bank agreed on a crackdown on international tax dogging, in the wake of the Panama Papers scandal. The Group has unanimously agreed that transparency in managing international finances is the only efficient instrument in fighting tax evasion, money laundering and the financing of terrorism. We remind you that an investigation conducted jointly by around one hundred publications worldwide has exposed the offshore holdings of an impressive number of politicians, celebrities and criminals.



    These giant leaks of offshore financial records, exposing a global array of corruption and crime, have been grouped under the name of Panama Papers. Against this background, the G20 countries have agreed that secrecy around offshore companies will be lifted and an international blacklist of tax havens will be drawn up. The Group has called on the OECDs Global Forum on Transparency and Exchange of Information for Tax Purposes to take some measures, by October, which should ease states access to information on the identity of the people hiding behind shell companies in tax havens.



    The IMF chief, Christine Lagarde, hailed the initiative, saying that international efforts to fight tax evasion have been constant in the past few years. Lagarde has said: The IMF very strongly welcomes and supports this new momentum to fight corruption and tax evasion… we at the IMF will question whether the technical assistance that we provide to anti-money laundering and to counter-terrorism financing can be better leveraged to identify what more is needed in terms of implementation.



    According to NGOs and the media, the amounts hidden in tax havens between 2008 and 2014 exceed the GDP of Spain, Russia and South Korea put together. In Romania, authorities have decided to open an investigation into the Romanian citizens whose names are mentioned in the Panama Papers. Over 100 natural persons and companies are currently investigated.


    (Translated by E. Enache)

  • Romania and the Panama Papers

    Romania and the Panama Papers

    The golden days of tax havens began after World War Two. Tax havens first appeared as a means of paying lower taxes. Using them is not considered illegal, only possibly immoral, but some may not even agree with this description. In recent years, financial experts have warned that tax havens have become more than a way of paying less tax, thus concealing a problem in the state of residence. Under the protection of anonymity, offshore companies may be used to channel untaxed or illegally obtained money.



    The recent Panama Papers scandal shows that heads of state, top-level politicians, billionaires, celebrities, sports figures and financial institutions, as well as criminal networks, have used more than 20 tax havens to hide their money. From 1977 until 2015, the Panama-based Mossack Fonseca law firm, the worlds fourth biggest offshore law firm, created and managed more than 214,000 shell companies for their clients from over 200 countries and territories, including Romania. The Social Democrat Euro MP Victor Negrescu said in a press release that according to revelations in the local media, the amount of money hidden away in tax havens by Romanian business people is equal to the countrys health care budget and more than the budget allocated to youth. Neculae Plaiasu, the head of the National Office for Prevention and Control of Money Laundering provides some specific figures:



    “From 2003 and March 2016, the Office has records of 286 natural persons and legal entities that transferred money to and from Panama. In specific figures, 21.7 million euros went in and 50.5 million came out.



    Neculae Plaiasu also said his Office last year submitted 13 reports to the General Prosecutors Office with the High Court of Cassation and Justice and another 6 to the Romanian Intelligence Service over suspicious financial activities. The president of the National Agency for Tax Management Dragos Doros says there are suspicions about Romanian citizens and companies who may have carried out money laundering activities in connection to the Panama Papers. The Agency is now working to obtain the necessary information. Dragos Doros:



    “At this point, every piece of tax information must be carefully weighed. This type of information cannot be established in a matter of days. No tax authority in Europe has so far made public its conclusion.



    Both the head of the National Agency for Tax Management and that of the National Office for Prevention and Control of Money Laundering have called for an improvement in the legal framework to prevent tax evasion.


    (Translated by C. Mateescu)

  • The Bucharest Government Continues its Mandate

    The Bucharest Government Continues its Mandate


    The Social Democrat Victor Ponta, who has been the head of Romania’s Government since the spring of 2012, faced another no-confidence motion on Tuesday, the fourth so far. This time, however, the motion was rather atypical, as the argument put forth by the Opposition had to do more with the prime ministers legal problems rather than with the government’s technical errors.



    The Liberals, who initiated the no-confidence motion, argued that Victor Ponta can no longer be head of the government because he lost his credibility after being sent to court by the National Anti-Corruption Directorate for forgery of private documents, accessory to tax evasion and money laundering.



    Alongside the former Social Democratic senator Dan Sova, Ponta is accused of involvement, while a lawyer, in a case of legal assistance contracts signed by the Turceni and Rovinari power companies that damaged the state budget with 16 million euros. Nevertheless, as of June 5, when the anti-corruption prosecutors made public the charges brought against the Prime Minister, Victor Ponta has repeatedly dismissed them and has turned down President Klaus Iohannis’s calls for his resignation.



    Predicted and anticipated by almost all commentators, the failure of the motion dubbed “You must choose between Romania and its compromised Premier, Victor Ponta. Sack Victor Ponta!” gives him the perfect chance to continue his mandate. That is because the Opposition is allowed to file a similar motion only next spring.



    In order to pass, the motion needed to be supported by at least 276 senators and deputies, that is half plus one of the total voters. It only got 207 votes in its favour and 8 against it, as – after having publicly expressed their support for the Cabinet – the MPs in power, that is the Social Democratic Party, the National Union for the Progress of Romania and the Alliance of Liberals and Democrats, refused to cast their vote.



    Once the Government’s position reconfirmed, the Finance Minister, Eugen Teodorvici announced that Romania would officially ask the IMF to sign another loan agreement with Romania. Negotiations, he said, would focus on structural reforms and not on maintaining the budget deficit. He last precautionary agreement that Romania signed with the IMF in 2013, worth 2 billion euros, expired on Saturday. Its purpose was to protect the Romanian economy from possible shocks from foreign markets.



    Since the start of the economic crisis, in 2009 and up to present, Romania has forged three consecutive loan agreements with the IMF and the EU, which supported the government policies in the budgetary field, the privatisation of state-owned companies and macroeconomic stability. However, in the first half of this year, the Romanian authorities have passed a comprehensive tax cut package under the new Fiscal Code, which the Romanian Central Bank, the Romanian Fiscal Council and also the international financial institutions have criticised, souring the relationship between the Government and the IMF.


  • Statements on the Independence of the Judiciary

    Statements on the Independence of the Judiciary

    Sent to court for forgery of private documents, accessory to tax evasion and money laundering in a case involving legal assistance contracts signed by the Turceni and Rovinari power companies in the south, the Social Democrat PM Victor Ponta continues to claim his innocence and to deny both the charges, and the Oppositions and President Iohannis calls for his resignation.



    The disputes on the topic are far from being over. As long as Ponta remains the head of the government, the state might stand to lose, said the chief prosecutor of the National Anti-Corruption Directorate, Laura Codruta Kovesi, in a talk show on a private TV channel. Kovesi explained that in the lawsuit against the PM, the Oltenia Power Company does not take part as a plaintiff because it is under the authority of the government, and implicitly of the PM.



    Laura Codruta Kovesi: “This is not the first case in which a public institution is headed by the same person that is sent to court as a defendant, and we have this problem, that the public institution in question will not bring civil action against that person. Magistrates, for instance, get suspended from office when they are sent to court, and I think the same rule ought to apply to the other civil servants in public institutions, because in such cases where the state does bring civil action against a person, it is obviously the state that will incur losses.



    On the other hand, the chief anti-corruption prosecutor denied the Prime Ministers claims that his indictment was the result of political interference. In a separate statement to another television station, Victor Ponta hinted that President Klaus Iohannis was behind this decision:



    Victor Ponta: “Im wondering whether the President resorted to all this pressure to have me indicted, because I think the statements he has made are not suitable for a president of Romania. If he says he is happy with be being sent to court, then perhaps he has his reasons.



    The President had previously stated that the passing of the no-confidence motion tabled by the Liberals in Opposition would solve a major problem that Romania is facing, namely having a prime minister who is facing criminal charges. The Presidents chief of staff, Dan Mihalache, was also quick to reply to the Prime Ministers allegations: “The Presidency will not get into this kind of low-level squabble, because we have work to do. If Mr. Ponta has doubts regarding the independence of the judiciary, he may report them to the Judicial Control Corps, Mihalache said.