Romanian government may extend extra 20% profit tax on mineral resources exploitations

The 20% additional profit tax applied on incomes obtained from mineral resources exploitation that are not manufactured locally might be extended to next year, according to a proposal of the finance ministry. The PSD-cabinet has initially pledged to eliminate the supplementary tax as of next year, yet a finance ministry draft regulation extends again the elimination deadline to December 2018. The provision should have been included in the royalties’ law draft that was constantly postponed from approval. In fact, the economy minister recently declared that the royalties law draft project would be withdrawn from public debate, as it required a deeper assessment study.

The 20% supplementary tax on profits obtained by the mineral resources exploiters that are not processed domestically was introduced this year. The authorities mainly targeted the gas exploitations and grounded the decision on the fact that the gas market liberalization would bring consistent additional incomes for the gas producers. The finance ministry has not revealed any prints regarding the state’s collections from the tax.

A new royalties’ system on mineral resources has been expected for several years, but suffered constant delays mostly over pressures from the oil and gas players. Romania’s royalties have not been changed since 2004, when the local authorities committed in the oil and gas Petrom’s privatization to keep the taxes on resources stuck for ten years. The mineral resources royalty taxes range between 3.5% and 13.5%, for some categories being considered as very low compared to the EU average. The draft royalties project currently under public debate leaves unchanged the royalties regime for the offshore oil and gas exploitations, but increases the taxes on onshore exploitation.

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