The provisions of the new fiscal code
The Chamber of Deputies is to debate the Fiscal Code bill proposed by the Government and passed by the Senate in April.
România Internațional, 23.06.2015, 13:51
Passed by the
Senate of Romania in April, the new draft Fiscal Code drawn up by the
Government was Monday unanimously passed by the Budget Committee of the Chamber
of Deputies. The final vote of the Chamber on the bill is scheduled for
Wednesday.
One of the key
measures involves the reduction of the standard 24% VAT rate to 19%. In the
original text, the slash was only 4%. Finance Minister Eugen Teodorovici said
on Monday that although the new Fiscal Code would take effect in 2016, the
measure could be implemented sooner, if the returns to the public budget in the
first six months of the year allowed it. Eugen Teodorovici:
We are
analysing, at the Ministry for Finance, the possibility of implementing this
measure earlier than January 1, 2016. Our calculations will tell us exactly
when that can be done.
This amendment
was the argument that persuaded even the Liberal MPs, in Opposition, to vote in
favour of that bill. But although he voted for a lower VAT rate, the former
Finance Minister Gheorghe Ialomitianu, from the Liberal Party, called on the
Government to take responsibility for the possible negative effects of that
measure, which was also received with reservation by the IMF and the European
Commission.
According to
expert estimates, the measure may lead to a widening of the budget deficit by
2.5 billion Euros, accounting for around 1.5% of the GDP.
Another
important stipulation of the new Fiscal Code has to do with slashing the VAT
rate from 24 to 9% for foodstuffs, non-alcoholic beverages, restaurant and
catering services. The measure took effect on June 1. The Government sees those
measures as a means to encourage consumption and implicitly to boost economic
growth.
The
draft Fiscal Code also does away with the special building tax as of January
next year, and with the 7 eurocent excise on fuels, which pushed the petrol and
diesel prices up last year. Also as of January 1, 2016, the 16% tax on
dividends will be eliminated, while the flat tax rate will be lowered from 16
to 14% starting January 2019. The IMF and the European Commission have
repeatedly warned that once those fiscal relaxation measures are implemented,
Romania risks missing the budgetary deficit target agreed on under the current
stand-by loan agreement.
