New Taxes on Natural Resources and Energy Businesses in Romania

Businesses in the natural resources sector might be subject to new taxes starting from February 1 2013, as per draft government ordinances expected to be enacted shortly.

The proposed new taxes concern the following businesses:

· exploitation of natural resources (other than natural gas);

· natural monopoly activities (electricity and methane gas); and

· natural gas production and trade.

The special tax on natural resources is to be levied from businesses that exploit and extract natural resources (except for natural gas), including: oil, coal, wood, uranium and thorium, and other ferrous and non-ferrous metals. The tax rate is 0.5% of the monthly revenues from the exploitation and extraction of such natural resources.

The tax on natural monopoly activities is of interest for electricity and methane gas businesses. The tax applies to power and/or natural gas transmission and distribution operators. The level of the tax depends on the monthly quantity of gas/power transmitted or distributed to consumers, in the following ranges:

· 0,1 LEI/ Mwh for gas/power transported via the transmission system to the distribution networks;

· 0,75 LEI/Mwh for gas/power transported via the distribution networks only;

· 0,85 LEI/Mwh for gas/power transported only via the transmission system.

Natural gas businesses will also be subject to a special tax of 60% of the additional income obtained as a result of deregulation of natural gas prices, less royalties and upstream investments. This tax is levied upon businesses that extract and sell natural gas from Romania (both on-shore and off-shore, including territorial sea, contiguous zone and the exclusive economic zone in the Black Sea.) However, revenues from extraction capacities built after February 1 2013 are tax-exempt.

The Government proposed that these taxes are to be applied for a temporary period (i.e. until end of December 2014). In 2014, the long-debated potential increase of natural resources royalties could be enacted.