The Ministry of Finance (MF) has put forth a measure to support the business community that would encourage innovation and technological progress by expanding the number of taxpayers who qualify for tax incentives for research and development investments.

It suggests to regulate the decrease from the minimum turnover tax of the value obtained by applying the 16% rate on the amount representing the additional deduction of 50% of eligible expenses for research and development activities. The measure is proposed because at this moment the taxpayers who pay the minimum turnover tax do not qualify for research and development tax incentives.

„After a series of consultations with the business community, we come up with this proposal, which can help us bridge the gap with other EU member states that encourage research and development much more strongly. Tax incentives for these activities have existed for many years in Romania and our data show that there are 800 companies that have benefited so far, with annual deductions of over RON 1 billion being recorded. Technological progress is the main engine of economic growth, which is why we must do everything we can to provide Romanian companies with a competitive framework that allows them to compete on an equal footing with companies from other countries. This is the reason why we proposed to extend the incentives to include those who pay the the minimum turnover tax, in order to support large companies dealing with innovating such as Dacia, Bosch, Farmec, Chimcomplex, Continental, Uipath, etc.” according to Finance Minister Marcel Bolos.

The implementation of this measure would allow the continuation of the stimulation, starting from the date of application, 2024, of the research and development activities carried out by large companies that have to pay the minimum turnover tax.

According to the Ministry of Finance, given that the fiscal result for 2024 has not yet been finalised, the decrease would also determine the corporate income tax at the level of the minimum turnover tax for the fiscal year 2024/modified fiscal year starting in 2024.

„The incentive effect of the proposed measure regarding the tax deduction applicable to the payment of the minimum turnover tax will consist of: reinvesting the funds deducted in research and development; increasing research and development investments and expenses; attracting new research and development projects to Romania; acknowledging that research and development is of strategic importance,” according to the ministry.

The proposal is supported and was discussed with the Concordia Employers’ Confederation, the Association of Romanian Motor Vehicle Manufacturers (ACAROM), the French Chamber of Commerce, Industry and Agriculture in Romania (CCIFER), the Romanian-German Chamber of Commerce and Industry (AHK), the Employers’ Association of the Software and Services Industry (ANIS).

The draft bill is posted on the MF website and was drafted following consultations with the business community.

AGERPRES