Tuesday, May 21, 2013

Wall Street Journal: Eastern Europe is for SALE

The Wall Street Journals considers that many investors see Central and Eastern Europe (Romania included) as a region full of opportunities, emerging markets alternative to "traditional" ones such as Brazil or Asia, the countries of the offering for privatization assets ranging from film studios in Poland to CFR Marfa in Romania (lately described as a flop in the country).

Given as an example by Wall Street Journal were the last year auction of the Polish government which auctioned two studios that deal with animated films and documentaries, with prices ranging between 100,000-200,000 USD.

The tudios in Poland appeared but "trifles" against the assets offered for sale by other governments. In Romania, the government tried to sell the national rail company catalog for 81 million dollars, while the national postal company (Posta Romana) is selling for $ 112 million, WSJ notes, illustrating the privatization of CFR Marfa through an image with a the tram line 32 in Bucharest ?!

"The list is endless because the governments in the region develops aggressive privatization programs, including health centers, manufacturers of ceramic and even farm animals," notes the US Publication.

Sales of this type are considered to be loaded with risks and difficulties for foreign investors continues newspaper said. Low yields offered in other parts of the world, and gain 2% associated with U.S. Treasury securities, increased investor interest but Central and Eastern Europe, analysts say.

But we consider the reason why Eastern Europe to be the most important in the article by the American Publication, respectively: For many investors, Eastern Europe, with investment opportunities, low debt and a low cost of labor, it seems more attractive than the western continent, mired in a sovereign debt crisis and prolonged recession.

Wednesday, May 15, 2013

Lower taxes for Romanian Micro Companies

The Romanian Government is certainly looking very active recently, coming up with quite a few measures looking to boost the economy as well as increase budgetary funds generated by taxes. In this line, the Romanian government announced that it is looking to reduce the taxes for Romanian Micro Companies. The 3% income tax for micro companies (mandatory earlier this year), could be decreased to 1.5% from July, the Ministry of Finance announced, quoted by Mediafax.

"The rate of 1.5% seems more ethical, especially since February turnover tax is required. My interest is to collect, and to give them the chance to develop, grow and enter afterwards in another tax bracket, "said the Romanian Minister.

Income ceiling for micro this year has been reduced from 100,000 euros to 65,000 euros, equivalent in lei, and all private companies that do not exceed this threshold pay a 3% tax on income earned from 1 February 2013.

The government estimated that the taxes thus collected would micro budget of 457 million LEI this year. 

One additional fairly important detail on the formation of a Romanian Micro Company is that a Romanian company which on the date of registration in the commercial register has subscribed a capital representing at least the equivalent in RON of EUR 25,000 can opt to pay profit tax (16%). The option shall be final, provided that the shre capital value remains the same for the entire period of existence of the legal entity. If this condition is not respected, the legal entity pays income tax (3%), beginning with the fiscal year following that in which the share capital is reduced below the RON equivalent of EUR 25.0000, of the other conditions are met.

For any details pertaining Romanian Company Law, level of taxes and levies for Romanian companies, or details on how to form a Romanian company, please visit our main website: www.RomanianLawOffice.com.

Thursday, May 9, 2013

Romanian Government pays European Funds of 1,4 billion lei to Romanian beneficiaries

After Romania has joined the EU in 2007, one of the most problematic issues has been that of the European Funds. Past governments have outdone themselves in having the lowest absorption rate in EU history and lagged behind in payouts toward Romanian beneficiaries (public or private). Now the Ponta Government claims to handle this differently. As one of the first steps the Romanian Government has approved a new loan worth over 1.4 billion LEI, which will allow payments to Romanian beneficiaries, demonstrating once again their commitment to catch up with bills. While facilitating a new loan this will accelerate the absorption as eligible amounts paid to beneficiaries are to be reimbursed by the Commission after sending in the shortest time necessary documents, declared the Romanian Minister for European Funds.

The overall effort toward faster payouts and higher rate of  absorption does not really seem to yet impact the Romanian people. Instead more and more opinions are seem to be that efforts concentrate on attracting Public Funds instead of private ones, or conditions for attracting private funds are very restrictive. Who exactly placed those restrictions, Romanian opinions differ here, the Romanian Government or the EU authorities. What is certain however is that the enormous amounts which were mentioned for last years have never actually reached the country.