The shares of petroleum companies Petrom and Petromidia (Rompetrol Rafinare) fell on the Bucharest Stock Exchange yesterday after information surfaced about the possibility of an additional tax being introduced. This tax will target companies in this field and was devised with the profits made from the rise in the petroleum price in mind.
The representatives of the companies say that this tax is nonsense. The petroleum companies last year posted cumulated profits of nearly 500 million euros against a figure of over 7 billion euros in turnover.
Petrom, the largest company in Romania, logged net profit of 391 million euros against a 2.97 billion-euro turnover. The state still owns 40% in the company and an additional tax would hurt its profits. The state is supposed to collect 84 million euros in dividends from Petrom for last year”s profit. According to the information on the market, it was Economy and Trade Minister Codrut Seres who proposed this tax. Seres could not be reached by the time the story was ready for print. Finance Minister Sebastian Vladescu in turn did not have any comment to make. Vladescu was recently talking about finding a solution to levy a tax on the “immoral profit” made by the petroleum companies as a result of the rise in the petroleum price on the foreign markets.
The information about the possibility to introduce a special tax was published in the “Gandul” daily.
The article said the state was supposed to introduce a 10-16% special tax on turnover. To Petrom, this would mean paying its entire profit for last year as tax, while other companies would slip straight into the red.
The representatives of Petrom, controlled by the Austrian OMV group which owns 51%, say, “a tax on turnover is nonsense.”
Werner Schinhan, the deputy general manager of Petrom, says a “tax can be levied on profit, but if it is, it should target all the petroleum companies.”
“It is not the decision of the companies, but purely a governmental one. Each government defines its own tax policy. As until now, Petrom will comply with these requirements,” Schinhan added.
Gabriel Biris, a tax lawyer and managing partner of Biris Goran Constantinescu, says that there has never been a profit tax to distinguish between sectors in Romania or in any other European country for that matter.
“I haven”t heard of a tax levied on turnover to exist in any country. The European directives do not leave room for introducing a new tax on turnover, other than the VAT,” Biris says.
As for the profit tax, there has not been any such tax differentiated by sectors of activity in Romania or any European state so far, he adds.
According to Biris, the introduction of a new tax cannot target retroactive enforcement.
In his opinion, if the state is considering a tax for petroleum companies, this tax should target the profit derived from the extraction of raw material and not from the processing or distribution of petroleum products.
The rise in the crude oil price does not always mean profit for every petroleum company.