Page 125 - SE Outlook Regions 2023

Producers of oil, gas and coal as well as refineries in Romania will pay
a temporary solidarity contribution (also known as windfall profit tax) of
60% levied on their taxable profits in 2022-2023 that are 20% or more
than the average profit for the 2018-2021 period, according to an
emergency decree passed by the government on December 28.

The action, also a transposition of an EU Regulation previously
announced by the government, prompted protests by industry
associations and investors. The most relevant objection is related to the
size of the tax: 60%, well above the minimum floor (33%)
recommended by the EU.

3.9.5 Construction

The construction sector is undergoing a certain recovery after it
stagnated (-0.6% y/y) in 2021. Thus, in the 12-month period to October,
the construction works volume increased by 10% y/y – and all three
segments (residential, non-residential and civil engineering rose
significantly). The infrastructure projects financed from the EU budget
and the non-residential (industrial and logistic) segments are expected
to remain robust while the residential segment might be hit by the rising
interest rates and shrinking disposable incomes resulting in more
caution on the buyer side.

The construction works index in Romania rose by 34.3% y/y in October
2022, driven by civil engineering works (+50% y/y) and the
non-residential buildings sector (+42% y/y).

The seasonally-adjusted index increased by another 5.5% in the month,
resulting in an overall 12% leap over the past three months when the
same two sectors outperformed (rising by +18% and 12% respectively)
in contrast with the 5.5% contraction seen in the residential buildings
segment.

For the third month in a row, construction activity marked a new record
for the past decades.

This seems to be the combined effect of rising interest rates and more
cautious decisions on the side of the household (residential buildings)

125 SE Outlook 2023 www.intellinews.com