The Draft Government Decision was published on 4 April 2014 on the Ministry of Public Finance (‘MPF’) web-site: http://discutii.mfinante.ro/static/10/Mfp/transparenta/PR_HG_aj_reg_03042014.doc

The Draft Government Decision (“the Draft”) regards the implementation of a new state aid scheme for Romanian legal entities which intend to invest in Romania. The investment could be made in any economic sector with a few exceptions specifically mentioned in the Draft (e.g. steel sector, coal sector, shipbuilding sector, etc.).

The state aid consists in nonrefundable funds granted for initial investments which lead to creation of new jobs. The maximum intensity of the state aid and the maximum amount specified in the Draft by regions are as follows:

► for investments in Bucharest: 15% but not more than EUR 11.25 mn for the period 1 July 2014 –

31 December 2017, and 10% but not more than EUR 7.5 mn for the period 1 January 2018 –

31 December 2020;

► for investments in West and Ilfov regions: 35% but not more than EUR 26.25 mn;

► for investments in other regions than the above mentioned: 50% but not more than EUR 37.5 mn.

The eligible costs based on which the state aid is computed are the salary costs incurred by the beneficiary over 2 consecutive years.

The eligibility criteria for the investment include:

► The investment has to lead to creation of at least 20 jobs, out of which minimum 3 jobs for disadvantaged workers (namely, individuals under 24 years or over 50 years, etc.);

► The investment can not be started before receiving of the financing agreement;

► The jobs have to be created after the date when the financing agreement is received, but not later than 3 years from the completion of the investment.

Additional eligibility criteria regarding rentability, equity, related parties or management are specifically provided.

The evaluation of the financing applications will be performed by the representatives of the MPF in two stages as follows:

► Stage 1 – Selection of the eligible investment projects based on scoring – based on the financing applications, on the plans of the creation of jobs and on other documents submited by applicants during this stage. The submission of the documents shall be done during calls, that will be announced on MPF web-site, which will in principle last for 20 working days.

► Stage 2 – For the applicants accepted after the Stage 1: analysis of the business plan and of other justifying documents related to the business plan for the issuance of the financing agreement or of the letter rejecting the financing request.

Within this state aid scheme, financing agreements may be issued within the period 1 July 2014 – 31 December 2020, and the payment of the state aid will be made during period 2015 - 2025. The state aid scheme’s budget is of

RON 2,700 mn (approximately EUR 600 mn), with the possibility of being supplemented, estimated beneficiaries being 1,500.

For additional information, please contact:

Venkatesh Srinivasan, Partner – Head of Tax and Legal

Ernst & Young SRL and E. Platis, C. Bazilescu LLLP

15-17 Ion Mihalache Blvd.

Bucharest Tower Center Building, 22nd Floor

Sector 1, 011171, Bucharest, Romania

Tel: (40-21) 402 4000, Fax: (40-21) 310 7124

Email: office@ro.ey.com

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