The law modifying the Fiscal Code, which came into effect on June 4th 2005, has again attracted the attention of investors on the Stock Exchange, of businessmen and consultants, after Premier Calin Popescu-Tariceanu announced nothing more would be changed after January 1st, 2006. As a matter of fact, it was on the basis of this law that the budget for next year was built.
After months during which the website of the Ministry of Public Finances has hosted various Code amendment formulas for public debate, the regulations set early this summer will remain unchanged.
In a nutshell, the process of taxing the various income categories at a flat rate of 16% is taken further, only the application method differs from the intentions the Finances had made public. The 16% tax will be levied on incomes from interest rates, gains from stock transactions, dividends and incomes from real estate transactions, with each category including a series of particular cases that are treated differently.
As a result, we''re witnessing a return of the complications related to the taxation of gains from stock transactions through the different applications of the 1% and 16% tax rates, depending on the period the respective stock is held over and the moment of sale. The Finance Ministry has indefinitely postponed its intentions to set the value a stock registers during the last trading day of 2005 as a reference price, while the Ministry is maintaining the preferential treatment of investments with a duration exceeding one year.
Investors on the Stock Exchange, as well as fund investors, may be tempted to abruptly change their strategy linked to the application of the new tax, causing turmoil on the market. Brokers say they are expecting a tense week on the Stock Exchange and some are afraid that by the end of the year the Finance Ministry may have other surprises in store for them. It is not yet clear when and to what extent the Finance Ministry''s projects of "tackling" some business environments, such as those of the tobacco and alcohol industries, will materialise. One of the hotly debated proposals concerned the introduction of a 2% tax on cashed incomes, instead of taxing the difference between the sale and the purchase price, together with the introduction of some minimum prices for alcohol and tobacco products.
All of a sudden, the urgent issue of boosting of the state budget by levying higher taxes on cars and luxury houses, has vanished. The authorities have unexpectedly remembered the principle of maintaining predictability in the alteration of fiscal legislation, and are indefinitely postponing such an amendment. razvan.voican@zf.ro ; vlad.nicolaescu@zf.ro
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