Prime Minister’s advisor said tax will be paid quarterly (instead of annually as some guessed previously), current ROBOR implies an annual rate of 1.2%.
Banks were once again in focus on the Bucharest Stock Exchange as the Romanian Prime Minister’s adviser Darius Valcov gave a media statement, shedding some light on the new tax. The tax rates were published before, but it was unclear whether the banks would apply them annually or quarterly. Unfortunately, the latter will be the case. The Government is using the method to squeeze what they consider “extra” cash in order to fill the budget hole.
As expected, the news was met negatively by investors, so the price of both Banca Transilvania (-10%) and BRD Bank (-6%) collapsed on the day. Comparing the price to 18 December 2018, a day before the tax was originally published, Banca Transilvania is down 27% and BRD 23%.
The quarterly tax will apply as follows:
|wdt_ID||Average of ROBOR 3M and 6M||Quarterly Tax rate (% of banks assets)|
|1||up to 2%||0.0%|
|2||up to 0.5% above the reference level||0.1%|
|3||0.51%-1.0% above the reference level||0.2%|
|4||1.01%-1.5% above the reference level||0.3%|
|5||1.51%-2.0% above the reference level||0.4%|
|6||over 2.0% above the reference level||0.5%|
Currently, the average of ROBOR 3M and ROBOR 6M stands at 3.075% ( ROBOR 3M: 2.92% – ROBOR 6M: 3.23%). That implies 1.075% above the 2% reference level and an annual assets tax of 1.2% (0.3% quarterly).