By Teodora Luca, Senior Associate at Mihai Luca Law Office
Pursuant to the provisions of Article 12(3) and (4) of the Government Emergency Ordinance no. 77/2009 on organization and operation of gambling, the gambling operation authorizations have a 1-year validity term, which starts running as of the 1st of the month that follows the month when the gambling organizer made payment of the fees due in advance:
(3) The gambling operation authorization is valid for one year as of the issuing date thereof, except for the gambling forms defined at Article 10(1)(p), where the validity term of the authorization for temporary gambling is of 3 months(…);
(4) The issuing date shall be understood as the first date of the month that follows the month when the documentation submitted by the economic operator was reviewed and favorably cleared, and payment of the amounts due in advance by the economic operator was made, pursuant to the provisions of Article 14 of this Emergency Ordinance.
From the above-quoted provisions, it follows that two different moments in time are of essence in the procedure applied to issue the operation permits, and for the coming into force thereof:
- the preliminary approval of the organizer’s application (meaning the favorable clearance of the documentation); and
- payment of fees due in advance.
The term set for payment of the fees related to the authorizations to operate slot-machine gambling is set out under the provisions of Article 14(2)(v) of Government Emergency Ordinance no. 77/2009:
(v) for slot-machines gambling, the fee shall be due for each gambling means, and shall be paid in 4 equal quarterly installments, as follows:
- for the first quarter – before including the 25th of the month that follows the month when the underlying documentation was approved;
- for the other quarters – before including the 25th of the last month of the quarter (meaning 25 March, 25 June, 25 September, and 25 December) for the next quarter;
The failure to make payment of the fee due in advance pursuant to Article 14(2)(v)(A) leads to revocation, by operation of the law, of the preliminary approval issued by the National Gambling Committee, further to the application filed, and on the basis of the underlying documents submitted by the gambling organizer. In this regard, the provisions of Article 10(6) of the Methodological Rules adopted under the Government Decision no. 111/2016 are beyond interpretation. (6) When, on the expiry of the payment term set out in the decision of the Committee, the economic operators fail to prove they have met their duty to make payment of fee related to the gambling license for the first year, and the fees related to the gambling operation authorization, the approval previous granted on their application to be issued the license and/or authorization is revoked by operation of the law, without any further formalities.)
Considering that the terms set out for paying off the tax liabilities were extended under the Emergency Ordinance no. 29/2020 on certain economic and tax-budgetary measures, in our opinion, an assessment of the effects of the preliminary approvals issued by the Oversight Committee during the state of emergency could prove an exercise of interest, in the twofold scenario identified: i) when the requirement to make the payment due in advance has been met within the term set out at Article 14(2)(v)(A) and (ii), assuming that the authorization fee is not paid before the end of the state of emergency.
In the simpler scenario when of the fee due in advance by organizers is paid, the operation authorization shall come into force effective the 1st of the next month. But, bearing in mind that, pursuant to Article VIII(5) of the Government Emergency Ordinance no. 48/2020, the fee is not due for the length of the state of emergency, any payment made for this period qualifies as a claim of the taxpayer, which may be the subject to an request for refund or set off.
With a view to determining the consequences of not making payment of the fee during the term set out at Article 14(2)(v) of the Government Emergency Ordinance no. 77/2009, is important to determine whether the derogation under Article (viii) of the Government Emergency Ordinance no. 29/2020 applies or not to these duties, too.
In our view, there are no sound legal arguments to consider that the authorization fee is excluded from the category of tax liabilities the payment term of which has been extended pursuant to the provisions of Article (VII) of the Government Emergency Ordinance no. 29/2020, reading as follows:
(1) As to the tax liabilities falling due as of the effective date of this Emergency ordinance, and not paid before the coming to an end, according to para. (4), of the measures instituted under this article, no default interest and penalties will be due pursuant to the Code of Tax Procedure, as this was approved under Law no. 207/2015, as subsequently amended and supplemented.
(2) By way of derogation from the provisions of Article 157(1)(a) of Law no. 207/2015 on the Code of Tax Procedure, as subsequently amended and supplemented, the tax liabilities reference is made to at para. (1) are not qualified as overdue tax liabilities.
(3) Any on-going forced execution by attaching tax receivables is suspended, and no new such proceedings are to be commenced, except for the forced execution proceedings pursued to recover tax receivables awarded under court judgments rendered in criminal cases. The measures suspending forced execution by attaching pursuable amounts represented by income and liquid assets are applied, by the operation of the law, by credit institutions or garnishees, without the tax bodies being required to pursue any further formalities.
(4) The tax measures provided at paras. (1) – (3) will come to an end within 30 days of the end of the state of emergency.
Therefore, pursuant to the provisions of Article (VII)(1) and (2) of the Government Emergency Ordinance no. 29/2020, no default interest and penalties are due on the tax liabilities falling due as of the effective date of the ordinance, and no paid within 30 days of the end of the state of emergency, because these liabilities are not qualified as overdue tax liabilities.
Under the provisions of Article 1(27) of the Code of Tax Procedure Code, tax liabilities are inclusive of any payment due to be made to the general consolidated budget.
The authorization fees, even if not regulated under the Tax Code, but under the Government Emergency Ordinance no. 77/2009, but which fall due to the consolidated state budget after 21 March 2020, the effective date of the ordinance, are delayed until the date set out under Article VII(4) of the Government Emergency Ordinance no. 77/2009, meaning until the expiry of the 30-day term after the end of the state of emergency.
By way of example, the preliminary approvals issued in March 2020, the payment of which is, according to Article 14(2)(v) of the Government Emergency Ordinance no. 77/2009, 25 April 2020, will be extended their validity until the expiry of the 30-day term that follows the end date of the state of emergency.
As the public debate puts forward the idea that the state of emergency would come to an end on 15 May, the payment term for the authorizations shall be 14 June.
Consequently, the operation authorizations will take effect as of the 1st of the month that follows the month when the relevant payment is made, meaning 1 June, or 1 July.
Considering that we are faced with an unequivocal intention of the lawmaker to extend the payment terms for all tax liabilities the initial due date of which fell during the state of emergency, and no other condition, besides the due date falling during this period, was imposed, it would be unreasonable to consider that the fees set out at Article 14(2)(v) of Government Emergency Ordinance no. 77/2009 should be left out.
At the same time, by reference to the provisions of Article 10(6) of the Methodological Rules, as long as the condition laid down under the law, meaning not to make payment until the respective due date thereof, has not been met, the penalty of revoking approval is void of effects: When, on the expiry of the payment term set out in the decision of the Committee, the economic operators fail to prove they have met their duty to make payment of fee related to the gambling license for the first year, and the fees related to the gambling operation authorization, the approval previous granted on their application to be issued the license and/or authorization is revoked by operation of the law, without any further formalities.
In a nutshell, it is manifest that the preliminary approvals issued by the Oversight Committee of the National Gambling Office are extended by operation of the law, because the payment term set for making payment of the authorization fees has been extended, and these may only be revoked if such payment is not made within the 30-day term that follows the end date of the state of emergency.
As already explained above, any interpretation in the sense that extension of the payment term does not apply to the gambling authorization fee lacks any grounds, and would be highly detrimental to the rights of the organizers.
On the other hand, such an interpretation is also counterproductive and excessively bureaucratic, undermines the steps already taken both the organizers and the authority as to authorization of the gambling means, and effectively forces the companies to rework their applications and documentations already reviewed and approved, causing unreasonable delays in granting the organizers their rights, and creating significant backlog for the authority.
However, we do believe that, under the current circumstances, where it is of essence that the authority shows flexibility and smoothly identifies legally-fair solutions, the interpretation due to be given by the National Gambling Office would allow gambling organizers to draw on all the rights and benefits granted to them by the lawmaker with a view to helping the industry survive these times,