The government leaves state companies without any profit

• State companies will hand over to the public budget 90% of their profits, nearly double of what they are required to give right now

90% of the profits of companies could be transferred to the state budget, prime minister Emil Boc announced yesterday.

So far, companies in which the state was a majority or sole shareholder, were required to pay up to 50% of their profits to the state budget.

It is clear that state owned companies will be required to fork up nearly double what they are paying now.

PM Emil Boc also said that the 20% cuts in expenses for goods and services will also apply to state owned companies as well, and not just to public institutions. Purchases of cars and furniture will also be prohibited.

• The government"s plans for the remainder of 2010

Yesterday, at the end of the Government meeting, the Prime Minister announced the priorities of the Government for 2010.

According to the prime-minister, these include: reducing the number of employees in the public sector, supporting business activities and investments, fighting tax evasion and improving the level of absorption of European funds.

• Three steps to help the economic recovery

In order to support the business environment, Emil Boc mentioned three state aids that will be implemented in the near future.

One of these measures involves the allocation of 200 million Euros for state aids intended for private companies.

Boc said that these state aids are intended for companies that invest a minimum of 10 million Euros and create at least 100 jobs. Previously, only companies that invested 30 million Euros and created a minimum of 300 jobs would qualify for this aid. The prime minister expects this measure will help create 5,000 jobs.

Another measure announced by the Prime Minister involves increasing the capitalization of the Fund for SMEs with 46 million Euros.

Boc claims that 7,000 SMEs will benefit from this measure and they will be able to borrow up to 2 billion Euros.

Last but not least, the PM said that an emergency decree was passed allowing private companies to use the for which they are borrowing money as collateral.

• The government expands the taxation base

People receiving royalties will only be allowed to deduct 20% of their expenses, being required to pay a tax of 16% on the remaining 80%, according to the amendments which were made to the Tax Code yesterday, the Minister of Public Finance, Sebastian Vlădescu, said yesterday, quoted by Agerpres.

Under the current legislation, up to 40% of expenses for royalty contracts are deductible.

Sebastian Vlădescu explained: "Royalties: just 20% of expenses are deductible, so you can no longer deduct 40%, like you did until now. Perhaps for a sculptor, the 40% deductibility made sense, because we were talking about buying a piece of marble and working on it. I wonder, in the case of machinists, what do they buy that is so expensive that it requires a 40% deduction off their wage? And it is the same in the case various other employees in various sectors, where a lot of people that had no connection to the act of creation in itself were paid like that".

The minister showed that the new emergency ordinance sets up new individual payment requirements.

Sebastian Vlădescu explained: "People will pay a 16% income tax, after deductions. So, instead of 10%, like it was until now, it will now amount to approximately 12.8%. Then there are the individual contributions, meaning those that individuals are required to pay, which are owed on an amount equivalent to five average wages a year, as defined by the law of the budget, not to the full income, in order to avoid excessive taxation, but at the same time making it so everyone contributes to the healthcare system or the unemployment aid, which would help these systems that all of us sooner or later turn to, become functional".

The minister justified the new provisions of the law saying that they would allow the beneficiaries of royalties to qualify for public pension and entitle them to use the public healthcare system, apart from the need to fight tax evasion.

The new fiscal code will also tax meal and holiday vouchers, but they will only be taxed with 16%, and not with the other contributions paid by employees", the minister said.

Also, interest on current accounts and term deposits will be taxed 16%.

Revenues from operations on the currency or money market operations will be taxed at 16%, but allowing the compensation of losses in the next seven fiscal years. Reporting and payment will be made quarterly, with the settlement to be performed at the end of the year. (A.G.)