Thursday, June 24, 2010

Romania levies new taxes on state firms, individuals

BUCHAREST, June 23 (Reuters) - Romania's government raised the amount state-owned companies must contribute from their profits to the state budget and enforced new taxes on individuals and employers as it seeks to cut its budget deficit.

State-controlled firms -- many of them highly subsidised and loss-making -- must give up 90 percent of their profit to the state budget, up from 50 percent, to help the centrist coalition cabinet control ailing finances, Prime Minister Emil Boc said on Wednesday.

"State companies need to be part of the solidarity effort to support the state budget and they will deliver 90 percent of their profit to the state budget," Boc told a news conference following the cabinet's weekly meeting.

Utilities Transgaz (TGNM.BX: Quote) and Transelectrica (TSEL.BX:Quote) are the largest listed state-owned companies and among the few which are profitable. They have budgeted gross profits worth a combined 363 million lei ($105.5 million) for this year.

Bucharest's stock market had closed by the time of the announcement.

Under its 20 billion euros aid package led by the International Monetary Fund, the government has committed to lower subsidies to state firms and better control spending. State firms must also cut spending on goods and services other than those necessary to boost production and they are banned from spending money on cars or furniture, Boc said.

The government also introduced new taxes as part of its commitment to the IMF to step up its fight against tax evasion, Finance Minister Sebastian Vladescu told reporters.

The cabinet has widened the taxation pool by enforcing a 16 percent tax on income from copyright, income generated from interest rates on bank savings and meal tickets -- which some companies use to subsidise employee meals.

The measures, and some other minor taxes, will be enforced as of July and are expected to generate tax receipts worth an additional 0.3 percent of gross domestic product, Vladescu said. (Reporting by Marius Zaharia and Luiza Ilie; Editing by Mike Peacock) ($1=3.440 Lei)

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