THE SPECIAL CONSTRUCTIONS TAX HAS NO APPLICABILITY A special government

The Ordinance concerning the tax on special constructions has major problems that can't be solved by the clarifications passed yesterday in the government meeting, representatives of the business sector told us. They added: "From what we understand, the ordinance concerning the tax on special constructions has no applicability at the moment and those who don't know how to calculate what they owe are at risk of being sanctioned. The normal thing would be for the application norms to pass through the Parliament, after consulting with the business sector. It could take from two months to two years, depending on political will. By the time the situation became clear, the Government could extend the deadline for the implementation through this ordinance, say by six months. But if the Government has used the revenues it expected to collect from this tax when calculating the budget, then it has a problem".

The Government yesterday passed a series of clarifications concerning the manner of determining the tax base for the tax on special constructions, even though even representatives of the Executive admit the weaknesses of this law. Dragoş Andrei, advisor to the prime minister, said: "In a few days, the tax on special constructions will come into effect, it is a measure which should have been better prepared, discussed more in detail, with the representatives of the business sector, because every day there are new situations which its promoters did not take into account when they promoted it. I will give you an example, perhaps it is not the most relevant, but if this tax gets applied on the reactors of Cernavodă, it's over! Nuclearelectrica will have a major problem because all of these aspects were not taken into consideration".

He said that after yesterday's Government meeting, in which clarifications concerning the payment of the tax on special constructions were passed, he talked to the Minister of Public Finance, Ioana Petrescu, concerning the solutions which could be used to eliminate the special situations deriving from the implementation of this tax. "We are very concerned with what we can do to amend the ordinance, which will become law, to eliminate these issues", Dragoş Andrei said.

Representatives of the business sector have repeatedly complained that they don't know how to accurately calculate the tax on special constructions, because there are no norms for its implementation, even though he new tax has been implemented since the beginning of the year, and the first payment must be made by May 26th.

When asked two weeks ago about the situation of the so-called "pillar tax", which is supposed to be paid by May 26th and there are no implementation norms, prime minister Victor Ponta said: "We've told you about 100 times, we are going to tell you for the 101st time and you will still ask us the same question again: we've met with the business sector, everybody understood very clearly what they need to report and what they have to pay. What else should I tell you?".

In the beginning of the year, the government introduced a property tax for special constructions, of 1.5% of the value of the construction.

The tax applies to structures such as hydroelectric plants, transformer stations and posts, relay stations, thermoelectric and nuclear plants, constructions for the transporting of electricity, dams, tracks and platforms, drills for crude oil, natural gas and salt, loading and offloading ramps, smokestacks and cooling towers, tailing ponds, fishing ponds, pools, railroad transport infrastructure, road infrastructure and telecommunication cables and lines.

Prime Minister Ponta recently said that the Government would get a surplus of revenue from the taxation of special structures, far higher than the target set cautiously in agreement with the International Monetary Fund, which represents one of the arguments towards lowering the social security contributions. The Minister of Finance, Ioana Petrescu, said that just from one subgroup of companies that will pay this tax, the state budget will collect more than one billion lei, compared to the initial forecast of just 488 million lei, which according to the prime-minister, had been set at the request of the IMF.

According to Mediafax, the delegate minister for the state budget, Liviu Voinea, said that from the amounts recorded on the companies' balance sheets and that weren't taxed, revenues of 1.8 billion lei would be achieved.

The estimated impact of a potential reduction of the social security contributions calculated for the second semester of 2014 is 2.6 billion lei.

• Ovidiu Nicolescu: "The tax on special constructions was devised by incompetents, not by specialists"

The tax on special constructions ("the pillar tax") was designed haphazardly, by amateurs, not by specialists, Ovidiu Nicolescu, the president of the National Council of Small and Medium Enterprises Romania (CNIPMMR) recently said. He added: "The impact of the pillar tax on companies will be very high. The authorities have not issued any impact notes, they did not comply with the directive of the European Union. We predict that investments in Romania will drop. This tax is present in other countries as well, but it has values ranging between 0.25% and 0.5%, and it is not very frequently encountered. Normally, it doesn't apply to poles, but rather to transformers and other constructions of that nature. It will have multiple negative effects, both economic and social". In the beginning of May, the Professional Association of Romanian Makers of Autoclaved Aerated Concrete "PRO BCA" accused the Government of ignoring the complaints filed by companies concerning the Special Constructions Tax ("the pole tax") and it requested that the tax be calculated based on the amount that was left unamortized, rather than based on the book value, as well as excluding assets under preservation from the tax base.