No deductibility for mortgage credits

The spending on mortgage rates will not be deductible from the income tax as of 2004, not even up to the 500 euro annual cap, as stipulated in the Fiscal Code draft forwarded to Parliament.

The Senate shed this provision and official sources say the Deputies will not go back on this issue, with further restrictions possible to enact instead. Thus, there goes the prospect of boosting the mortgage credit market and implicitly of housing construction financed through this system.

The talks over the Fiscal Code draft began at the Chamber of Deputies on Monday, following a vote of the normative act in the Senate two weeks ago. The other deductions were maintained, i.e. personal deductions, the deductions for domicile refurbishment-related expenses up to 15 million ROL a year, for home insurance premiums up to 200 euros/year, contributions to the optional occupational pension schemes up to 200 euros/year and the contributions to the private health insurance up to the same amount.

“We are currently working intently to finalise the Fiscal Procedure Code so that it could be promoted by the Law enabling the Government to issue emergency ordinances during the parliamentary recess. The actual enforcement will probably begin in 2004,” Cornelia Petreanu, director general of the Fiscal Legislation Department within the Finance Ministry yesterday told a seminar on introducing the Fiscal Code organised by professional service company Ernst & Young Romania. Petreanu explained there was room for improvement in the current draft of the Code, and said its enactment “will put an end to the legislative fervour that has created an instability in this field, which is hardly beneficial to the business environment or to those that have to monitor the enforcement of the regulations.”

Under the circumstances, the Fiscal Code will no longer refer to the Procedural Code but to enforcement guidelines the completion of which is also delayed for as long as the parliamentary debate is not over so that a final version would be available for the guidelines to point to.

“The guidelines have largely been completed and have been discussed with the social partners. As soon as the Code is issued we will make the exact references to the final version. Unfortunately, many norms will be issued after January 1, as an order of the Finance minister to make endorsement formalities easier,” Petreanu said. razvan.voican@zf.ro