Romanian tax authority to wipe debts of 10 defense companies
The National Agency for Fiscal Administration (ANAF) is preparing to wipe the debts of 10 defense contractors in order to allow them to resume arms production if necessary.
The measure aims to encourage defense companies to maintain their potential for the production of defense capabilities. The companies are the Bucharest Mechanical Plant, Plopeni Mechanical Plant, Moreni Auto-mechanical Plant, Metrom, Tohan, Făgăraș Powder Factory, Pirochim Victoria, Sadu Mechanical Plant, Carfil and the Cugir Arms Factory, according to Profit.ro.
Many of these state-owned companies have a longstanding tradition of producing armament. The Moreni Auto-mechanical Plant, for example, was founded in 1968 and has since produced over 15,000 armored vehicles, most of which were exported to countries in the former Soviet space, Algeria, or Bangladesh. In 2017, the plant and the German military vehicle producer Rheinmetall began a joint operation to manufacture 8X8 armored vehicles.
Nevertheless, all have faced problems with maintaining their profitability. Plagued by outstanding debts, the Făgăraș and Pirochim Victoria powder factories shut or radically lowered production well before the war. The Făgăraș factory, for one, registered losses every year since 2007, and a similar situation took place at Pirochim Victoria. The Cugir arms factory had losses totaling RON 7.45 mln (EUR 1.5 mln) in 2020. Its older debts stand at RON 68.6 mln, according to Adevarul.
Russia’s invasion of Ukraine has put the spotlight on the defense industry in Europe. Back in March, Romanian president Klaus Iohannis argued that Romania needed to increase its defense spending to 2.5% of GDP, from 2% currently. Other EU member states also upped their defense spending in the aftermath of the start of the war, bringing the industry to EUR 200 bln last year.
Debts of roughly RON 106 mln (EUR 22.95 mln) will be forgiven as a result of the latest ANAF measure, but critics say that the defense companies need investments worth over EUR 30 mln to acquire the latest production technologies if they hope to become profitable.
(Photo source: Robbiverte/ Dreamstime)
