Romania is preparing to tax multinationals at 15% on profits from 1 January 2023, Finance Minister Adrian Câciu announces. According to Economedia information, 44 companies operating in Romania will be affected by the 15% minimum corporate income tax.

The Economic and Financial Affairs Council (Ecofin) discussed on Tuesday in Brussels the proposal for a Directive on the minimum level of taxation for multinational groups in the EU. Finance ministers were invited to confirm, at the political level, the priority of this dossier and the need to transpose into EU law, by 1 January 2023, the international rules agreed in the Inclusive Framework of the Organisation for Economic Cooperation and Development (OECD). The directive ensures a minimum effective tax rate of 15% for the global activities of multinationals. The rules cover all large national or international groups, including those in the financial sector, with combined financial revenues of more than €750 million a year and with a parent company or subsidiary located in an EU Member State.

“Romania supports all measures to combat tax planning. We appreciate that this project will contribute to ensuring fair competition within the EU internal market. The adoption and implementation of the directive is also a priority objective for Romania, which is why we will prepare all the necessary measures for its implementation as of 1 January 2023” , said Adrian Câciu, Minister of Finance.

44 companies affected in Romania

A number of 44 multinationals operating in Romania will be affected by the future provisions on a 15% minimum corporate income tax at the global level (Romania has a 16% rate), established following an agreement reached within the Organisation for Economic Cooperation and Development (OECD), according to data provided by the Ministry of Finance at the request of Economedia.

Data released by the National Centre for Financial Information shows that at the level of 2019 there were registered in our country a number of 44 economic agents who reported a turnover exceeding 750 million euros.

European directive after historic OECD agreement

The European Commission proposed in December a directive providing a minimum effective tax rate for the global activities of large multinational groups.

The proposal implements the global agreement within the Organisation for Economic Cooperation and Development (OECD), which allows countries to impose additional taxes on multinational profits.

According to the Organisation for Economic Co-operation and Development (OECD), which led the negotiations, setting a minimum tax of 15% would generate €150bn ($175bn) in additional annual revenue.

In July 2021, G20 (group of 20 developed and emerging economies) finance ministers announced a “historic agreement on a more stable and equitable international tax architecture”, setting a global tax “of at least 15%” on multinational profits.

“Pillar 1” of the agreement involves redirecting part of the corporate tax paid by multinationals to so-called “market countries”, i.e. the countries where they do business. This means that tax will no longer be payable only where multinationals have registered their head offices and have thus managed to pay lower taxes through tax optimization practices.

Companies with a worldwide turnover of more than €20bn and a profit rate of more than 10% are particularly targeted. The aim is to ensure that multinational companies, especially those in the digital sector, which have benefited greatly from the pandemic, no longer pay taxes that are derisory in relation to their revenues.

“Pillar 2” means setting a minimum effective tax of at least 15% on the profits of multinational companies. A country will be able to tax profits earned abroad by a company registered in that country if it has been taxed abroad at a lower rate than this minimum threshold so that the difference can be made up.

Germany applies it from 2023, Switzerland from 2024

German Finance Minister Christian Lindner wants to impose a 15% minimum corporate tax rate for multinationals as early as January 2023, reports WirtschaftsWoche, cited by Bloomberg.

According to the German magazine, state officials held initial talks this month with the aim of drafting a law. Germany will then wait for a corresponding EU directive.

The Swiss government plans to implement the 15% minimum corporate tax rate from January 2024, Bloomberg reports. Given the complexity of the issue, which requires a change to the Swiss constitution, the government will implement the new measures through a so-called ordinance and only then start a legislative procedure to approve the new tax regime. Switzerland will hold a national vote on the constitutional change in May 2023.

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