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139 amendments to Fiscal Code and 236 new fiscal provisions in 2018


In 11 months and a half, 139 amendments were made to the Fiscal Code and 236 new fiscal provisions appeared, fiscal instability leading to fewer investments, fewer new companies set up, as well as the increase of suspensions, dissolutions and insolvencies, according to the National Council of Private Small and Medium Enterprises in Romania (CNIPMMR).

Since the beginning of the year to December 17, the legislative frame was modified by 862 laws and orders with general applicability (309 laws, 18 government orders, 107 emergency orders, 428 government decisions), without taking into account orders issued by ministries or agencies, the IMM Council shows in a report.

Over 45% of laws and orders approved significantly and directly affected enterprises, including small and medium companies. “With this huge volume of official documents adopted in 11.5 months of 2018, Romania will continue to rank first in the regional top of legislative amendments (in Central and Eastern Europe) while neighbour countries have the tendency to simplify things and ensure a stable and predictable legislative frame,” the council informs.

Amendments to fiscal law generated multiple negative effects on small and medium companies: increased fiscality, higher bureaucracy for all tax payers and employers, significant effort to implement legislative reforms, higher personnel expenses, higher administrative expenses to upgrade IT programs, the need to restructure, problems in ensuring competitiveness and carrying out export contracts.

Effects of increased fiscal law instability in 2018:

Over January-September 2018, direct investments of non-residents in Romania dropped by 5.7%, amounting to 2,517 million euro (compared to 3,731 million euro in the same period of 2017), of which participations to capital (including net estimated reinvested profit) amounted to 3,152 million euro, while intergroup credits recorded a net value of 365 million euro.

Companies with foreign capital set up between January 1- October 31 (4,718 companies) are fewer by 177 than in the same period of 2017 (4,895 companies).

The overall company registration number over the same period of 2018 dropped by 8,457 companies, compared to 2017 (113,144 vs 121,601).

The number of suspensions, dissolutions, insolvencies, including companies with foreign capital was higher than in 2017.

The number of suspensions in the first 10 months of 2018 grew by 13.32% (15,014 suspensions, compared to 13,249 in 2017).

The number of dissolutions  grew by 20.71% in 2018 (29,278 dissolutions compared to 24,254 in the same period of 2017).

The number of insolvencies grew by 28.07% in January-October 2018 (1492 insolvencies compared to 1165 in 2017).

CNIPMMR demands the initiation of a REFIT Program for the simplification of the legislative frame in Romania, similar to the program initiated by the European Commission in 2002, to ensure coding, reforming legislation, abrogation and elimination of useless and irrelevant laws and decrees, revision and withdrawal of certain documents that are being elaborated, replacement of juridically mandatory documents with less strict alternatives such as voluntary accords, as 862 orders are very difficult to know and apply.

For the period 2019-2020 CNIPMMR requests the adoption of a normal juridical behaviour which the other European countries apply, ensuring a stable, predictable legal frame as an essential condition for investors, observing the principles of smart regulations: an open and transparent decision making process, quality social dialogue, the systematic evaluation of the impact legislation has on small and medium companies, the application of the principle “think at small scale first”, observing fiscal principles (amending the Fiscal Code to ensure the stability of compulsory taxes and contributions for a period of at least one year, when there cannot be any amendments).