The draft Fiscal Code the Romanian Government presented this week poses a series of issues related to Romania’s obligations towards the EU. Many of the provisions in the document are typical Romanian innovations and may bring distortions to certain markets, in contradiction with European policies.

Micro and small firms with a business figure below 100,000 euro and up to nine employees will, according to the draft legislation, pay a 16% profit tax starting next year, instead of the current income tax of 3%. That would affect some several tens of thousands micro-enterprises on the Romanian market.

“Such a measure is not requested by the European Union just as nobody requested us to place taxes on programmers”, says Cristian Parvan, secretary general for the Association of Romanian Business People - AOAR.

He says that on the contrary the EU countries have a series of elements to stimulate small and medium firms and certain fields to provide increased competitiveness on the market.

The Government-supported Code has opponents in the Romanian Parliament as well. Varujan Pambuccian, head of the IT&C commission in the House of Deputies, says the elimination on tax exemption for programmers cannot pass the parliamentary vote.

And the new tax on the domestic Dacia cars, which is bound to increase their price, suggests that some of the new measures are made to encourage companies that sell more expensive products.

Another example in this regard is the new tobacco excise, which affects cheaper brands mostly while leaving the more expensive products almost untouched. The minimum excise increases from 90% to 95% according to the project – and the percentage takes into account the price of the best selling brands.

And the moves comes after the excise was upped from 67% to 90% early last year.

“The minimum excise level is inappropriate for the purchasing power and the structure of the Romanian market”, says Gilda Lazar, Corporate Affairs Director for JTI Romania.

The fact that the excise is established on the best selling brands raises questions about the free competition, as the measure might lead to distortions and the application of an illegal treatment of certain products.