Distributors of goods, unhappy with the turnover tax

The 1% tax on turnover will have a negative impact on the economic sector of goods distribution, and implicitly on the national economy, it is stated, in a press release sent to the Editor, by the Association of Romanian Goods Distribution Companies (ACDBR ).

ACDBR representatives say in the quoted statement: "We note that such taxation cannot be supported by FMCG distribution companies, where the profit margin depending on the products distributed is on average between 0.47% and 3.4%. The application of such taxation in the traditional distribution sector of consumer goods would have a negative impact on the activity carried out by companies that are members of ACDBR and not only, but also on traditional trade, i.e. small retailers and those in HoReCa in Our country. At the moment, in real terms, the profit margin of a distribution company in the field of tobacco products (products that generate, after petroleum products, the highest value from excises to the state budget) is between 0.47% and 1, 37, and that of a beverage and food distribution company is between 1.5 and 3.4%. However, the application of a tax rate of 1% on turnover exceeding 50 million euros would burden the financial situation of distribution companies, making this activity practically unprofitable and blocking the supply of over 60,000 companies in the traditional market and the HoReCa field. Our analysis of cigarette, food and beverage distribution companies shows that the impact on profit caused by the application of IMCA is between 35% for FMCG companies and 83% for cigarette distribution companies, which is a doubling of the current tax".

The goods distributors claim that due to the seasonality of the activity, in the first five months of the year they record losses, which are recovered in the following months of the year.

"By applying the IMCA (minimum turnover tax) of 1%, companies would pay a very high quarterly tax without making a profit, which would lead to a reduction in the capitalization and liquidity needed to support the business in the market, generating bank loans to support cash-flow and, automatically, higher costs", states the quoted press release.

Therefore, the representatives of the distributors request the Government and the decision-makers that the companies active in the economic sector of the distribution of goods be exempted from paying the minimum turnover tax, noting that, otherwise, their activity will be seriously disrupted, leading to the closure these businesses with all the repercussions it will have on the more than 60,000 companies in the traditional trade market, which is dominated by most insolvencies and closures.

ACDBR representatives also show that the new minimum turnover tax would be applied to goods distribution companies, after through GEO 67/2023 the Government increased the capping of the commercial addition to 14 basic foods on the entire distribution chain at the level maximum of 5%, which would have already caused a decrease in the profitability margin of economic agents in this activity sector.

Moreover, the entrepreneurs claim that the increase in excise duties on beer and cigarettes will lead to a consistent decrease in consumption, which will affect the volume of sales, generating the restructuring of the actual activity that has a direct effect on staff layoffs, thus increasing the unemployment rate and, hence , producing negative chain effects on the national economy.

According to the press release, the 38 member companies of ACDBR represent 40% of the total traditional goods distribution market, have 15,000 employees, a total turnover of 2 billion euros and a car fleet of approximately 10,000 vehicles.