Telecom operators ask government to scrap greed tax

Romanian telecom operators have asked the government to scrap the so-called “greed tax” on the economy’s sectors with the highest margins. The Association of Romanian Mobile Operators (AOMR) – that includes the French Orange Group, Germany’s Deutsche Telekom and Britain’s Vodafone – said in a press release that the tax would arrest their developments and lead to a degradation of the network absent necessary upkeep.

“Emergency Government Decree 114/2018 imposes a set of taxes upon the communications sector which threaten to imbalance a part of the economy that has so far offered high-quality services at very affordable prices in a European Union comparison”, the statement said. “The annual 3% tax on turnover would mean about EUR 100 million ($114.2 million.”

All this comes in a year when mobile operators will have to pay significant license fees to the government for 5G frequencies and begin large-scale developments into the 5G network, AOMR said.

Romanian Finance Minister Eugen Teodorivici announced on December 18 a supplemental tax on telecoms companies, banks and energy utility firms.

Telecoms and energy utility companies will be subject to an additional 3% tax on their turnover and energy companies will also see their prices capped at RON 68 ($16.6) per MWh. The extra tax on banks will be a progressive tax based on the three- and six-month Romanian inter-bank offered rate (ROBOR) and with these rates currently at 3.04% and 3.34% respectively, their extra tax will be 0.9% on assets.

The additional taxes are necessary to cover the government’s already announced plans for wage and pension increases. According to estimates of the Romanian financial press, these taxes will bring in an additional RON 10 billion ($2.45 bln) to the budget.

Since the effects of the tax on the banking sector have become evident, the national currency dropped to an all-time low against the euro and the index of the Bucharest Stock Exchange has lost over 10%.

Author: Dénes Albert