Finance Ministry hesitating to tax last year's employee perks

The commotion stirred by the prospect of retroactively taxing 2002’s employee perks based on enforcement guidelines yet to be officially published, has made the Finance Ministry think twice. The guidelines have been modified several times over the last few days in order to find a compromise solution: the cash and non-cash employee perks registered as non-deductible expenses by the employer in 2002 will not make up taxable income for the employee, with the rules of the game set to change for 2003. This also goes for the insurance premiums paid by the employer for the employee.
The income taxation norms were approved by the Government in December 2002, over a year after the deadline set by Ordinance 7/2001 on income tax.
Everybody has been eagerly waiting to see how the guidelines in question would clear up several problems: how to register and tax the so-called non-cash employee perks offered by the employers, as well as how to deal with the insurance premiums paid by the employer for the employee.
The waiting is not over yet, because the Finance Ministry cannot seem to make up its mind about the guidelines and send them to the Official Gazette, as it keeps modifying them. They have now reached version number three, which, official sources say, Finance minister Mihai Tanasescu was supposed to present during the Government session.
This version explicitly stipulates that the salary and insurance premiums paid by the same company will be regarded as one income and therefore subject to taxes as one salary as of 2003. “This kind of policies is now dead. The only thing employers can do is find other ways to try and relieve some of the pressure put by this extremely heavy tax burden on the employees’ incomes,” Alex Massaci, a tax director with PricewaterhouseCoopers, told Ziarul Financiar.
Some uncertainty still persists as long as there is no official position on the issue.
“The Exchequer is expected not to look too deep into non-cash perks that do not seem outrageous such as a telephone card issued to the employee as part of the company’s internal policy,” Massaci thinks.