PM Mihai Tudose said the government will drop any initiative to replace the profit tax with a new tax on the turnover of companies, which has been heavily criticized by the private sector.

The decision was made following a meeting of the leaders of the ruling political coalition PSD-ALDE. According to the initial plans, the turnover tax would have had three brackets of 1, 2 and 3 percent.

“We will not enforce the turnover tax,” said Tudose. “You can consider this subject closed,” he added.

Instead, the government will work to make sure that companies pay their taxes in the area in which they make profit. The PM went on to say that that there are large companies that have reported no profit in Romania for decades and that the tax administration agency ANAF will develop its own IT program to see in “real time” how the “money leaves the country unjustified”.

On the solidarity tax, the PM explained that further projections are needed before making a decision. However, Tudose said that this tax targets individuals with a high income that benefit from “a lot of things from the state”.

The head of government suggested that the solidarity tax might also be abandoned if authorities conclude that the amount collected to the state budget will be small.

Earlier this June, after meeting with Jean-Claude Juncker, the head of the European Commission, the Romanian PM said that the turnover tax would not be implemented in Romania.