Caution issued by Romanian tax specialists over proposed tax modifications

The Romanian government's second package of reforms, which includes a tax reform bill aimed at being legislated by the end of August, is facing some obstacles. The Romanian Chamber of Tax Consultants (CCF) has expressed concerns about the negative economic impact and ambiguity of the proposed tax reforms, as outlined in a message to the Finance Ministry.

The CCF's message focuses on four categories of intra-group expenditures with limited deductibility in the draft law, as well as the ban on financing companies under financial strains through loans from shareholders. Doru Dudaș, president of The Chamber of Tax Consultants' (CCF) fiscal committee, argues that these provisions contradict EU, OECD, and other international treaties to which Romania is a party.

The CCF also argues that the reforms proposed by the Finance Ministry do not reflect the doctrines of any of the four political parties in the ruling coalition. Furthermore, the reforms do not follow liberal principles, breach the Social Democrats' support for local businesses, and the Hungarian party's preference for balanced economic developments, according to the CCF.

Dudaș also questions the origin of the proposed reforms, suggesting that radical provisions could have been addressed using existing instruments. If the issues raised by the CCF are valid, particularly those related to breaching international treaties, addressing them may delay the endorsement of the second package of reforms.

The second package of reforms includes chapters on public administration and state-owned enterprises, in addition to the tax reform bill. Some of the tax reforms in the draft law potentially breach existing international agreements, according to the CCF.

The proposed tax system reforms were presented by the SPD, specifically with proposals supported by the Seeheimer Kreis, a group of SPD Bundestag members, and discussed within the coalition including SPD leaders like Lars Klingbeil and Dirk Wiese.

The CCF's message includes detailed recommendations for improving the draft law. Doru Dudaș also argues that the ban on financing companies under financial strains through loans from shareholders may not be the best or sole solution in many cases. If the issues raised by the CCF are addressed, it may help in the smooth passage of the second package of reforms.

The second package of reforms has already been deferred twice since its initial announcement for the end of July. If further delays occur, it could impact the government's agenda and the overall economic stability of Romania.