December 29 (SeeNews) - Romania's government approved an emergency decree enforcing a solidarity tax on the profits of oil and natural gas producers and oil refining companies, aiming to raise 3.9 billion lei ($839 million/ 788 million euro) in budget revenues in 2023.
The decree enforcing a solidarity contribution of 60% of taxable profits that exceed by more than 20% the average profits recorded in the 2018-2021 period aligns with EU legislation adopted in October, the government said in a press release on Wednesday.
At least 70% of the collected revenue will be used to finance strategic investments in energy efficiency projects and/or green energy generation capacities, the government added. Proceeds from the solidarity contribution will also be used to finance support schemes for end-consumers, especially for vulnerable households, in order to mitigate the impact of price increases. The tax payment deadlines are June 25, 2023 and June 25, 2024.
According to the decree posted on the finance ministry's website, France and the Netherlands are considering a 33% tax on oil and gas companies' windfall profits, while Belgium already announced that it will also tax profits of nuclear energy producers. On December 6, Bulgarian lawmakers agreed on 33% corporate tax on windfall profits applicable in 2022 and 2023.
In response to the government's announcement, Romania's Oil and Gas Employers’ Federation said in a press release that the new tax endangers future investments. "The oil and gas sector is already overtaxed, as the average tax rate on natural gas revenues is over 60%, plus an 80% tax on additional revenues obtained as a result of deregulation of natural gas sector prices, tax on additional offshore revenues," the federation said.
On October 6, the Council of the European Union adopted a package of emergency legislation aimed at tackling soaring energy prices which included a temporary minimum 33% tax on profits for fossil fuel and refinery companies that exceed a four-year historical average by 20%. Member countries had to transpose the legislation by the end of this year.
(1 euro=4.9463 lei)