SIX FOREIGN COMPANIES WILL BE PAID MONEY FROM THE STATE BUDGET Cioloş finances the multinationals and ignores Romanian entrepreneurs

The granting of state aids to companies with foreign shareholders is a controversial subject, as Romanian businesspeople claim that while the state finances the multinationals, it doesn't support domestic entrepreneurs. It is well known that the foreign companies cheat the law, by transferring their profits outside the country, to avoid paying profit tax in Romania.

Recently, the inspectors of the General Division for the Administration of Major Taxpayers (DGAMC) have checked the activity of a multinational in the pharma industry and have found a loss of 44.49 million lei (approximately 10 million Euros), caused to the state budget by avoiding the payment of VAT.

This time, the Cioloş government has chosen to support a number of six private companies with a total amount of 621 million lei, as announced by the Ministry of Public Finances (MFP), which has selected Pirelli, Arctic, Clariant Products, Robert Bosch, Safe Med International and Alu Menziken, out of a total of 36 companies, to receive state aids.

The biggest amount, of 163 million lei, will be paid out to household appliance maker Arctic, which will use the money to create a new household appliance plant.

"State aids are one of the measures that have yielded the best results, through the investments made, the technologies developed, the creation of jobs etc.", economic consultant Ionel Blănculescu says.

Concerning the financing announced by the Ministry of Public Finances, he said: "What we are dealing with is the allocation this year of the funding available in the package pertaining to the 2014-2020 period. It is a national program which is called «State aid», which has also been approved by the European Union, whereby the state contributes to the achievement of major objectives. Now the funds for 2016 have been unlocked. The criteria a company has to meet to qualify for such financing concern the size of the human resources and the development of equipment".

Cristian Pârvan, the president of the Professional Association of Domestic Investors in Romania (PIAROM), recently stressed that last year, state aids for foreign owned companies amounted to 146 million Euros, while the support for Romanian companies consisted of the financing of ten projects of the Ministry of the Economy, with 160 million lei: "We need to place emphasis on Romanian innovation, on the Romanian industry and to leave the bunker output (bunker output means that while the turnover of the county of Argeş is twice as big as the one in Iaşi, the contribution to the GDP of the county of Iaşi is double that of the county Argeş). Romanian capital, which means 10-12 billion Euros annual investments in Romania, compared to 2-3 billion - foreign investments - must become a priority of our daily concerns".

Romanian owned companies are facing more problems, and need the intervention of the state, Cristian Pârvan thinks.

Ionel Blănculescu claims that the shareholder structure is not a criterion based on which companies could obtain state aid. "If they meet the conditions, then companies that are 100% Romanian owned can also get a state aid. The type of shareholders doesn't matter. Besides there are domestic companies that own shares in off shore companies", he told us.

Concerning the financing of the six companies mentioned above, the representatives of the Ministry of Finance said the following yesterday in a press release: "Out of 36 investment projects six have been selected with a total value of 2.28 billion lei. The state aid requested amounts to 621.4 million lei. Then, within a maximum of 45 working days from the publishing of the list, the six requests for financing agreement will be evaluated and the final results will be announced".

The 36 companies have asked for a state aid for total investments of 5.47 billion lei. The financing requested has amounted to a total of 1.98 billion lei, while the total budget of the session is 638 million lei, the officials of the Ministry also state.

They mention that the evaluation of the projects registered in the support scheme for new jobs, has also begun: "Within a maximum of 45 working days from the publishing of the list, the six requests for financing will be evaluated for financing and the final results will be announced. (...) The score was achieved based on the evaluation criteria stipulated by Government Ordinance no. 807/2014: the amount of the investment, the type of the initial investment, the location of the investment, the profitability of turnover (in the case of operational companies), the amount of subscribed and paid in capital (in the case of newly created companies)".

Part of the state aid scheme for stimulating the creation of jobs, 22 requests have been recorded by the Ministry of Public Finances between August 8 August 22nd, 2016, according to the quoted sources. They stated that following the investments in question, 3,653 jobs may be created, distributed across regions.

The evaluation of the requests and the documentation needed in the first stage is made within a maximum of 30 working days from the date of the closing of the session.