Romania is one of
\nthe European countries with the lowest tax-to-GDP ratio, that is below 32%. The
\ncollection of budget revenues was rather modest last year, just like in the
\nprevious ones. For more than a decade now, Romanian governments have come up
\nwith proposals to increase revenues by improving the rate of tax collection,
\nbut none of them have been actually implemented. On Wednesday, the current
\nGovernment announced an avalanche of fiscal relaxation measures, scheduled to
\ncome into force in 2016. The reduction of the VAT, of contributions to the
\nsocial security fund and of the flat tax are just three of the over 600
\namendments to the new Tax and Tax Procedure Codes. <\/p>\n
<\/p>\n
As regards the reduction of
\nthe VAT, which now is 24%, it will be done in two stages: a 4% drop next year,
\nand another 2% drop starting 2018. For basic foodstuffs, such as meat, fish,
\nvegetables and fruit, the VAT will be 9% starting in 2016, just as it is today
\nfor bread and pastry products. On the other hand, effective as of 2017,
\ncontributions to the social security fund will stand at 7.5% for employees, as
\ncompared to 10.5% as it is now, and 13.5% for employers, as compared to 15.8%
\ntoday. Finance Minister Darius Valcov says that easing tax pressure will
\nencourage legal employment, given that the Romanian labour tax system is quite
\ndiscouraging. In order to boost investment, the Government proposes the
\nelimination of taxes on constructions and dividends. Also, the flat tax will be
\nreduced to 14%, starting 2019. The Romanian Finance Ministry has also proposed
\nlower excises on diesel fuel by 20%, on lead-free gasoline by 18.6% and on beer
\nby more than 15%. Moreover, excises on coffee, jewelry and vehicles with a
\ncapacity of over 3000 cubic centimeters would be eliminated altogether. <\/p>\n
<\/p>\n
On the other hand,
\naccording to the new Tax Code, all individuals with income shall pay
\ncontributions to the social security and health insurance funds, and taxes for
\nmicro-enterprises, just like home and land taxes, will grow. The new draft tax
\ncode has been termed by specialists as ‘revolutionary’, but critical voices
\nhave already been heard. The Fiscal Council warns that such changes, in
\nparticular those regarding the VAT, usually have a strong negative impact on
\nbudget revenues. The opposition, too, believes that this relaxation is not
\ncredible, since the Social Democratic Party, which is now the ruling power in
\nRomania, has introduced new taxes, has suffocated the business environment and
\nreduced citizens’ purchasing power. Liberal MP Eugen Nicolaescu claims that his
\nparty will propose a thorough rethinking of the tax system, for the business
\nenvironment to ensure an annual economic growth rate of at least 5%. The new
\ntax code will be under public debate for a month, and then submitted to
\nParliament for approval. <\/p>\n
\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
The Romanian Government has announced a relaxation in fiscal targets, starting next year.<\/p>\n","protected":false},"author":2,"featured_media":61132,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[37738],"tags":[37989,116464],"coauthors":[],"class_list":["post-61131","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-today-in-the-news","tag-fiscal-releaxation-measures","tag-romania-en"],"acf":[],"yoast_head":"\n