Tax measures under review
The Romanian finance ministry has posted for public review a set of tax-related measures
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Roxana Vasile, 20.09.2023, 14:00
New fiscal measures are set to take effect on October 1 in Romania, after they were posted for public review by the finance ministry, following months of negotiations. The authorities are hoping to narrow the budget deficit and to avoid losing billions of Euro in EU funding.
One such measure is a 1% tax on turnover for small and medium-sized enterprises with annual revenues of up to EUR 60,000, and a 3% tax if their revenues go above this threshold. Banks and large companies with turnover in excess of EUR 50 mln are to pay a minimum tax of 1%.
In the IT industry, the income tax exemption valid so far will only remain in place for employees making up to EUR 2,000 a month, while contributions to public health insurance funds are reintroduced for workers in agriculture, the food industry and constructions.
Holiday vouchers will be worth more, but they will only be received by public sector employees with net incomes below EUR 1,600, and a ceiling will be introduced for the bonus paid for dangerous or harmful working conditions.
In turn, the VAT for housing and photovoltaic panels will be raised from 5 to 9%, and foodstuffs with high sugar content will carry a standard 19% VAT rate. The 5% VAT remains in place for firewood, thermal power, books and access to tourist sites and cultural events.
In the case of houses worth over EUR 500,000 and vehicles over EUR 75,000, a 0.3% tax will be levied on the difference between those ceilings and the asset value.
The government also plans to cut at least 25% of the state secretary positions, to scrap vacant posts and restrict executive positions in public institutions and in companies running on public capital.
The bill outlining these measures is first to be passed in Cabinet, and then the ruling coalition made up of the Social Democratic Party and the National Liberal Party will take responsibility for it before Parliament. Within 3 days after the document is presented to Parliament, a no-confidence motion may be tabled, and if endorsed, it leads to the Cabinet stepping down.
The Opposition argues that the proposed measures will have a negative impact on the economy, on entrepreneurs and the liberal professions, which is why Save Romania Union announced it was already discussing with other parliamentary parties the options for a no-confidence motion.
In theory, such a motion stands no chances to pass, but in practice nothing is impossible. And since in 2024 Romania will hold local, parliamentary, presidential and EU elections, the stakes are huge and a failure, either for the government, or for the Opposition, is equally dangerous. (AMP)
