The new Development Law is subject to public consultation from Thursday, May 5, 2016 and until Monday, May 16, 2016 at 17.00, while immediately after that it will be submitted for vote in parliament.

The full draft law for consultation can be found here.

Development Law - Content for public consultation

Content referred to public consultation : The new law focuses on tax incentives and, secondarily, on direct grants. In particular, as far as direct grants are concerned, 50% of them will be paid after the certification by the competent control body of the implementation of 50% of the total cost of the investment project, and subject to the prior coverage by the company of the entire own participation. As far as the remaining amount of the grant is concerned, or its total in case of non-implementation of the payment of 50%, it is paid after the issuance of the decision to complete and start the productive operation of the investment.

Also, the new law, in addition to excluding many professions and sectors, provides that investments of entities for which a pending recovery order is pending and which have been declared illegal and incompatible with the internal market (EU) cannot be subject to its provisions. At the same time, investment projects whose work has begun before the potential investor submits a relevant application for inclusion in the Law cannot be supported.

On the other hand, it responds to a long-standing demand of the business world for a stable tax framework. It thus gives fixed tax rates for 12 years on large investment projects of more than EUR 20 million. this should create at least 40 new jobs. Of course, the major problem remains the inability to access liquidity. A problem that is being attempted to be solved through the creation of Funds of Funds which, based on the planning that has been done at the level of intentions, will be able to provide equity, loans, guarantees to cover losses from risk finance investments. The aim is to create new and grow existing businesses, restructure viable businesses, develop the capital market for Small and Medium-sized Enterprises and improve the competitiveness of businesses, including those with between 250 and 500 employees.

Eligible expenditures

It is also worth mentioning that the eligible costs are the wage costs of the new jobs created by the investment for a period of two years from the creation of each job.

In particular, where the eligible costs are calculated on the basis of the estimated wage costs of the new jobs resulting from the implementation of the investment project, the following cumulative conditions must be fulfilled:

-the investment project entails a net increase in the number of employees reflected in Annual Work Units (AWU) in the specific business establishment, compared to the average of the previous 12 months while maintaining existing jobs,

-the filling of all jobs will take place within 3 years from the date of completion and start of productive operation of the investment,

-each job created through the investment is maintained in the region for a minimum period of 5 years, or 3 years for micro, small and medium-sized enterprises, from the date of its creation.

As foreseen, the incorporated enterprises will be exempted from the obligation to pay income tax on the profits made before tax on all the activities of the enterprise. The amount of the tax exemption will be calculated as a percentage of the value of the aided costs of the investment project and/or the value of the new mechanical and other equipment acquired by leasing.

Direct grants intended to cover specific eligible costs of an investment project are also expected. The amount of the grant is determined on the basis of the rates provided for in the Regional Aid Map, where the rates are different by region and enterprise size.

It is planned to subsidize the interest rate on loans for investment purposes, as well as the cost of the employment created. The law will cover part of the cost of new jobs created and linked to the investment project. At the same time, the development of a holding and risk-taking fund for start-up investment programs is planned.

Finally, the new law also introduces fast-track licensing procedures and direct service to investors.