Offshore firms required Interior Ministry approval first

Most people that have anything to do with the business world even in the tiniest bit have surely heard of offshore and its practical utility.

Which utility means, among others, significant fiscal benefits, in the absence of which many major foreign investors would not have dared invest in Romania.

The investments through offshore companies could soon be faced with one more obstacle to overcome in Romania because of a law modification draft presented by Control Authority Minister Ionel Blanculescu on Monday.

“The National Trade Registry Office will propose a new article to be introduced in the law on tax evasion, which binds every firm that registers in Romania and has tax haven or offshore-based companies among its shareholders to secure a special approval most likely from the Ministry of Interior and Administration,” Blanculescu yesterday said.

He did not specify what the object of this approval would be but backed the proposal by the fact that more than 90% of the big tax evasion operations are carried out through legal entities established by offshore or tax haven-based companies.

If the modification passes, even the already existing companies with offshore shareholders will be re-licensed. Blanculescu estimates a six-month deadline from the enforcement of the law will be enough for companies to renew their licenses.

“We will access all the databases out there, including FBI’s, to find out whether those companies are part of the black money laundering circuits from the beginning,” Blanculescu explained.

If the modification passes, most of the multinationals operating in Romania, which are already complaining about too much red tape, will find themselves forced to put together new files for the Romanian State to check.

“There are too many variables about the proposed special and preliminary endorsement. I see no obstacle in introducing the above-mentioned procedure if it is merely an informative one. On the other hand, if the endorsement in itself conditions the establishment of the trading company, then the measure can become legally questionable,” Florian Nitu, partner with Popovici and Asociatii, one of the leading law firms in Romania, said.

“The current legal framework binds every investor to demonstrate its creditworthiness before establishing a trading company in Romania, and this precaution is regarded as sufficient by most jurisdictions. A supplementary prudentiality measure such as that proposed could lead to conflicts between jurisdictions on the one hand, and to deviations from the normal competitive environment, ” Nitu feels.
laurentiu.ispir@zf.ro