Special fiscal measures implemented at national level through the adoption of Government Emergency Ordinance no. 29/2020 in the context of the COVID-19 pandemic
Given that the spread of COVID-19 virus has created circumstances with major negative impact on both global and national economies, the Romanian Government has aligned with the practice of other EU member states and has adopted a series of measures, of different characteristics, in order to manage the consequences experienced both by the business environment as well as by the taxpayers natural persons.
In this respect, starting with March 21, 2020, the Government Emergency Ordinance no. 29/2020 regarding some economic and fiscal-budgetary measures has entered into force, according to which, among the main measures drawn up by the Government for the benefit of the economic operators mainly, and of the small taxpayers secondarily, are as follows:
- The March 31st deadline for the payment of the taxes and duties on buildings, land and means of transportation is extended until June 30th inclusive, term up to which the bonuses established by the local councils for the payment in advance shall still be granted;
- The fiscal obligations’ calendar regarding the deadlines for filling fiscal declarations remains unchanged, the first date for their filling is still March 25, 2020. Although initially, according to the official statements, it was envisaged that the deadlines provided by the fiscal obligations’ calendar will be postponed, they remained unchanged, the Ministry of Finance limiting itself to mentioning on the institution's website that delays in submitting statements caused by exceptional and grounded situations will be dealt with by the authorities with the openness and indulgence provided by law;
- Starting with March 21, 2020, the state does not temporarily charge interests and delay penalties for the payment of budgetary fiscal obligations. This facility is maintained during the entire state of emergency period, as well as for an additional 30-day term following its cessation.
- Thus, the payment of any tax obligations which become due in this period of time can be postponed, without prior notice registered with the fiscal authorities, until maximum 30 days following the cessation of the state of emergency, without interests or delay penalties and without them being considered as outstanding fiscal obligations. After the aforementioned period, interests and delay penalties will be applicable in accordance with the legal provisions.
- However, although the payment obligations will not be considered outstanding obligations, it is still to be determined how they will be included in a tax clearance certificate issued by the relevant tax authorities. In this respect, it is advisable to verify in the future the manner in which these aspects are applied, especially in case of public tender procedures where such measure has a direct impact;
- At the same time, the Government temporally suspends or postpones the foreclosure measures by garnishment for the recovery of budgetary claims owed to the state budget by natural and legal persons, except for the foreclosures for the recovery of budgetary claims established by criminal judicial decisions. This measure shall be applied during the entire state of emergency period, and also for an additional term of 30 days from the moment such state of emergency ceases. We thus remind that, at this moment, the state of emergency is instituted until April 14, 2020 and can be extended by the decree of the President of Romania, with the Parliament's approval;
- The fiscal obligations of the debtors in the context of GO no. 6/2019 regarding the establishment of fiscal facilities shall be restructured in certain conditions. Thus, the deadlines in which the debtors facing financial difficulties, as per the criteria established by GO no. 6/2019 regarding the establishment of fiscal facilities, must file the notification and the request for the restructuring of their budgetary obligations and the cancellation of certain accessory debts are extended. More precisely, the deadline for filing the notification regarding the intention of the debtors to benefit from the restructuring of their fiscal obligation as per GO no. 6/2019 was extended until July 31, 2020, while the deadline for filing the request for the restructuring of the fiscal obligations as per the same ordinance was extended until October 30, 2020;
- Taxpayers applying the system of advance calculation and prepayment with respect to the corporate income tax have the option to choose for the entire year 2020 the calculation of the corporate income tax in the actual income system, based on the expenses and income registered for each trimester of 2020 with the fiscal adjustments et forth by the Fiscal Code;
- It is extended by 3 months from the date of cessation of the state of emergency, the deadline for submission to the Trade Registry of the statement regarding the real beneficiary, provided by Law no. 129/2019 for the prevention and combating of money laundering and terrorist financing.
Technical unemployment - a chance for both employees and employers?
The disputed option of technical unemployment seems to be a chance more and more employers are willing to take, especially in consideration of the fact that the state shall bear, from the unemployment insurance budget, the allowances to which the employees are entitled to.
The rule, as it is instituted by the Labour Code, states that the aforementioned allowances are of 75% of the base salary of each employee and shall be paid out of the salary fund of each employer.
What are the conditions to be met in order for the state to intervene and help the employers?
- QUANTUM – maximum 75% of the gross medium salary provided by the 2020 State Social Insurance Budget Law no. 6/2020, respectively maximum RON 4,071.75.
- MAXIMUM AMOUNT – the employers that reduce their activity (not applicable in case of complete shut-down) shall benefit from the amounts provided above for maximum 75% of the employees with active individual labour agreements as of the entrance into force of the Government Emergency Ordinance no. 30/2020 for the amendment and completion of normative acts and establishing some measures in the field of social protection in the context of the current epidemic situation determined by the spreading of the coronavirus SARS-CoV-2.
- The employers that totally or partially cease their activity based on the decisions of the public competent bodies according to the law, during the declared emergency period and that are in the possession of the emergency situations certificate issued by the Ministry of Economy, Energy and the Business Environment; or
- The employers that reduce their activity as an effect of the coronavirus epidemics and that do not have the financial capacity to pay all the salaries – the reduction of the activity shall be attested by a self-responsibility declaration stating that the cash-ins corresponding to the month preceding the one in which the declaration is submitted have been reduced by at least 25% in comparison with the January – February average cash-ins.
In order to benefit from such an allowance, the employers shall submit online, to the agencies for the workforce occupation, a request, accompanied by the relevant documents, by filling-in the standard forms attached to the aforementioned government emergency ordinance. The documents envisage the payment of the allowance for the previous month, and the effective payment shall be made out of the unemployment insurance budget, within 30 days, at the most, as of the submission of the documentation.
As such, depending on the effective payment date by the employers, they can also face the financial difficulty resulting from the payment term undertaken by the state.
Starting with 23 March 2020, the National Agency for Workforce Occupation has made available a sole contact line, to support the citizens’ access to information with respect to the technical unemployment, as well as email addresses for the transmission of the documents.
Financing of the SME segment
It is expected that the adverse economic effects as a result of the Coronavirus pandemic, will be felt throughout the entire economy. However, perhaps the most impacted segment will be that of the SMEs. The Government has adopted a series of measures supporting the economy, amongst which also measures encouraging the financing of SMEs through state guarantees and subsidising the interest owed on such credits.
We refer to the increase in the threshold of the state guarantees in the SME Support Programme – SME INVEST ROMANIA, granted by the state in favour of small and middle enterprises for investment and working capital credit facilities.
Financing granted to the SME segment will benefit from:
- State guarantees, through the Public Finances Minister, for a maximum of 80% of their respective value, excluding interest, fees and other bank costs related to the secured credit. The maximum value of the working capital lines cannot exceed the average value of working capital expenses in the last 2 years, up to a limit of RON 5,000,000. The value of investment credits cannot exceed RON 10,000,000. The maximum cumulated value of secured financings granted to one beneficiary based on this programme, cannot exceed RON 10,000,000.
- In the case of small and micro-enterprises, state guarantees will be granted to secured working capital lines for a maximum of 90% of their value, excluding interest, fees and other bank costs related to the secured credit. The financing is in a value of maximum RON 500,000 for micro-enterprises and a maximum of RON 1,000,000 for small enterprises.
A first for such measures is the subsidize of up to 100% by the Public Finance Ministry of the interest on credits to be secured with a state guarantee in favour of SMEs and micro-enterprises. The facility will be applicable starting with the moment the credit is granted and up to 31 March 2021, with the possibility of being extended for the period 2021-2022, in certain conditions to be established through an emergency ordinance.
The legislative act does not condition the SMEs which to access such credit lines secured with state guarantees on obtaining a state of emergency certificate. However, one important condition is that the SMEs do not have outstanding fiscal obligations or that these will be financed through the credit line in question.
However, crediting will still be up to commercial banks, which in their turn will analyse the opportunity of such financing depending of the good standing of the borrower and considering also the present climate of economic uncertainty. It is that much more important, the intention communicated by the National Bank of Romania, just last week, to review prudential banking regulations applicable to credit activity.
We mention that several banks have asked the National Bank of Romania for amendments to regulations so that facilities granted to clients facing temporary financial difficulties does not adversely affect the risk profile of such clients and that the loans do not fall under the nonperforming loans category.