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Southeast Europe
July 28, 2017 www.intellinews.com I Page 14
New Romanian government puts investors on fiscal rollercoaster
Clare Nuttall in Bucharest
Investors in Romania typically expect a bumpy ride when it comes to the tax regime, with frequently changing rules often motivated by political consid- erations. But the last few weeks have been excep- tionally turbulent, even by Romanian standards, with shock announcements and U-turns making
it virtually impossible to make sense of what the new fiscal landscape is going to look like.
It started on May 29, when Romania’s prime ministerial nominee Mihai Tudose outlined a list of radical fiscal changes to the parliament before being voted in by MPs as the country’s new pre- mier. Yet in less than a month, top officials from the government and the ruling Social Democratic Party (PSD) have backtracked on almost all the proposals set out in Tudose’s speech.
The changes were all the more unexpected since Tudose was broadly expected to continue the poli- cies of his predecessor Sorin Grindeanu. Both men had been appointed by the ruling PSD/Alde coalition, since the PSD’s leader, Liviu Dragnea, was unable to take up the post due to having a criminal conviction. Since Grindeanu was ousted by the PSD for failing to carry out its ruling pro- gramme quickly enough, the last thing anyone expected was for the party to tear up large parts of the programme and replace them with some- thing completely new.
Among the changes announced by Tudose were
a “solidarity tax” on high earners, a global income tax and the replacement of the existing profit tax with a turnover tax — the last one in particular
caused an outcry from groups representing major investors.
The American Chamber of Commerce (AmCham) in Romania slammed the lack of consultation be- fore the measures were announced, and claimed in a June 30 statement that they would “reverse the country’s macroeconomic performance, and isolate Romania from an investment perspective”.
CHANGES ARE GOOD
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