Romania announces new tax measures

Romania announces new tax measures

The Romanian government has posted a list of tax-related measures for public review.

New fiscal measures will take effect on October 1 in Romania, following months of negotiations by the finance ministry. The authorities are aiming to narrow the budget deficit and 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 revenue of up to 60,000 EUR, and a 3% tax if their revenues go beyond this limit. Banks and big companies with a total turnover exceeding 50 mln will be subject to a minimum tax of 1%.

The income tax exemption in the IT sector will remain in place for employees making up to EUR 2,000 a month, while contributions to public health insurance funds for workers in agriculture, the food industry and constructions are reintroduced.

But holiday vouchers will be worth more, but they will only be received by public sector employees with net incomes below 1,600 Euros, and a ceiling will be established for the bonus paid for dangerous or harmful working conditions.

For housing and photovoltaic panels, the VAT is now 5 to 9%, and food products with high sugar content will carry a standard 19% VAT rate. The 5% VAT remains effective for firewood, thermal power, books, and access to tourist sites and cultural events.

A 0.3% tax will be charged on the difference between the value of the house and the value of the asset.

The government also plans to reduce at least 25 of the state secretary positions, to scrap vacant positions and restrict executive positions in public institutions and companies running on public money.

The bill outlining these measures is to be passed first 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. A no-confidence motion may be tabled within three days of the document being presented to Parliament, and if endorsed, it could lead 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 whySave Romania Union announced it was already considering with other parliamentary parties the options for a no-confidence motion.

However, such a motion has no chances to pass in theory, but nothing is impossible in practice. Since 2024, Romania will also hold local, parliamentary, presidential and EU elections, and a failure, either for the government or for the opposition, is equally dangerous.