Lump Sum Tax Could Turn Into Progressive Tax

Andreea Arăboaei

Companies making an annual turnover below 12,000 EUR would pay a lump sum tax of 500 EUR per year, according to Florian Parvu, Vice President of the National Council of Small- and Medium-Sized Enterprises (CNIPMMR). The final decision will be published in the Official Journal in the near future. The lump sum tax is one of the consequences of the negotiations with the International Monetary Fund, which requested that State revenues must be increased in order to reach a budget deficit of 4.6% of the GDP.

Parvu explained that, following negotiations with the Finance Ministry, the different levels of the lump sum tax had been agreed. Specifically, companies with an annual turnover between 12,000 and 50,000 EUR will pay a lump sum tax of 1,000 EUR per year, while companies with an annual turnover between 50,000 and 100,000 EUR will pay a lump sum tax of 1,500 EUR. The next level concerns companies with an annual turnover between 100,000 EUR and 1,000,000 EUR, which will pay a lump sum tax of 2,000 EUR per year. Those with an annual turnover between 1 million EUR and 5 million EUR will pay 2,500 EUR per year, while those with an annual turnover between 5 million EUR and 30 million EUR will pay 5,000 EUR per year. Companies with an annual turnover exceeding 30 million EUR will pay a lump sum tax of 10,000 EUR, Parvu announced.

CNIPMMR representatives that the application of the lump sum tax on micro-enterprises should start from a higher minimum level of the turnover, except for the turnover generated from real estate transactions, restaurants and beverage production. Their proposal for a minimum level was 12,000 EUR per year. Otherwise, the Council believes that several tens of thousands of small companies would be "pushed into bankruptcy" at the cost of tens of thousands of jobs and significant detriment to State revenues and local development.

CNIPMMR also believes that micro-enterprises with a good tax record before the crisis (2008, 2007) should be exempted from the lump sum tax in order to encourage good debtors and protect the companies that were stripped of their profit as a result of the crisis and not through intentional tax evasions schemes. The Council believes it is very important to emphasize the difference between different levels of the lump sum taxation - similar to the system used in France - according to the volume of the turnover, in order to make it bearable for the micro-enterprises and to reflect the very substantial difference between the potential of various such enterprises.

CNIPMMR is asking the Finance Ministry to observe European Union fiscal practices and the commitments made by the Government and consult the social partners in general and the national business associations in particular upon making any fiscal or budgetary changes. Also, the Government should avoid raising the fiscal burden on good tax payers instead of contributing to worsening the crisis.