Moreover, adopting the measure through derogation from the Tax Code creates a harmful precedent, which affects the country’s fiscal stability, AmCham said.
Under the Tax Code, Romania applies a 16% flat tax on income.
Mediafax reported last week that the Government decided, through derogation from the Tax Code, to tax by 85% the severance pay granted to executives or managing board members.
Prime Minister Victor Ponta said Wednesday the measure will affect only the former heads of institutions reorganized into the country’s Financial Supervisory Authority (ASF).
On the other hand, the emergency ordinance recently adopted by the Government does not explicitly say its application is limited to the ex-members of the three institutions reorganized as ASF, which suggests it may also apply to companies in the private sector.
Romania’s Financial Supervisory Authority was set up on April 29 through the reorganization of securities commission CNVM, insurance market regulator CSA and private pension system regulator CSSPP.
The former CSA and CNVM heads received severance pay of over EUR100,000, which authorities deemed unacceptable.
“It is absolutely unacceptable to receive EUR800,000 (as severance pay, e.n.) after you earned EUR20,000-30,000 per month in a public institution,” Ponta said recently.
AmCham Romania has over 300 members (foreign and local companies) whose investments on the local market exceed $10 billion.