Reaction of the software industry, after the Finance Minister’s statements about the withdrawal of tax breaks: “At government level we have confirmation that no sudden change is desired”. More than 100,000 IT professionals benefited from the exemption in 2020

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Software industry representatives say they have confirmation “at government level” that they do not want an abrupt change without consultation on IT taxes. The Employers’ Association of the Software and Services Industry (ANIS) told Economedia that it is currently carrying out an impact study on the income tax exemption, which will be completed by the end of the year. According to data held by the association, 103,556 IT specialists benefited from exemptions in 2020.

Finance Minister Dan Vîlceanu announced on Tuesday that he is working on the option of eliminating exemptions from paying tax and income tax contributions in areas such as IT, research, HORECA and construction, and there was immediate discussion of eliminating these facilities. “All the exemptions from paying income tax and income tax contributions, plus the exemptions from paying local taxes, are somewhere in the region of 3% of GDP. That’s a huge amount. It’s a matter of equity, fairness. Some pay, some don’t (…) It’s one option, I mean all the exceptions. We also have criticism from the Commission and other international bodies,” said Vîlceanu. He added that any decision would be taken after discussions with representatives of the sectors concerned.

How do industry representatives view these statements? “First of all, I would like to underline that there are no concrete steps in this direction at the moment. At the moment, there is no draft legislation in this regard”, says Mihai Matei, president of the Employers’ Association of the Software and Services Industry (ANIS), to Economedia.

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“At government level we have confirmation that they do not want a sudden change and do not want a change without consultation. The discussions have emerged in the context of a broader, multi-sector analysis. The government is aware of the importance of this measure for the IT&C sector. At the moment, there is no draft legislation or reform of the tax system with regard to income tax. So, even if this intention of reform exists, we are talking about medium- and long-term plans,” says Matei. He added that the association mentions the pace of discussions with the government, “to encourage predictability, calculated and sustainable measures in the field of taxation, to encourage growth and maturity of the sector”.

ANIS now has an impact study of this tax measure underway, material that will be completed by the end of the year. This analysis is expected to provide accurate data on the impact and importance of this facility on both the IT&C sector and the macro-economy. However, the ANIS have a figure: according to data provided by ANAF, in 2020, 103,556 IT professionals benefited from this exemption.

The recurring theme

This is not the first time this discussion has been public headlines. Former PNL president Ludovic Orban has also spoken out against tax breaks since 2019. “Any income should be taxed. You can’t create tax breaks that take the form of privileges,” Orban said. But even in his own party the opinion was not unanimous. The income tax exemption for IT&C employees is a very small cumulative amount compared to the total revenue the industry contributes to Romania’s GDP, Sabin Sărmaș, chairman of the Chamber of Deputies’ IT&C committee, said in April. The former head of Romania’s Digitalization Authority gave assurances that the state would remain “a partner in this respect for the industry”.

In January 2021, the number of employees in the field of software creation who benefited from income tax exemption was 67,038, according to Hotnews.ro. “The impact of the income tax exemption is about 75 million lei per month,” reads a response sent by the Ministry of Finance following a question from PNL MP Florin Roman.

Edited for English

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