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May 20, 2022

Chamber of Deputies passes Tax Code draft with 19pct VAT from Jan 1 2016

The Chamber of Deputies passed the Tax Code draft in a 306-to-2 plenary vote with one abstention on Wednesday.
The draft law provides the cut of the Value Added Tax (VAT) standard rate to 19pct, from 24pct, starting with January 1 2016. The Government had initially proposed the VAT cut to 20pct from the beginning of 2016, and to 18pct from 2018.
Under the new Tax Code, the tax on the special constructions will be cancelled from 2016, and the flat tax is to decrease from 16pct to 14pct, as of January 1 2019.
Other amendments will be applied in the micro-enterprises sector, where the tax rate for micro-enterprises without employees will be 3pct of the revenues plus 1,530 lei for each quarter for which the tax is due. The tax rates will be 1pct for the micro-enterprises with more than two employees; 3pct for the micro-enterprises with one employee; and 3pct for the micro-enterprises in certain circumstances registered in the Trade Register – dissolution followed by liquidation, temporary inactivity, affidavit of non-operation at the headquarters / secondary offices.
The social security contributions per employee are to be cut from 10.5pct to 7.5pct from January 1 2018, and those due by the employer from 15.8pct to 13.5pct.
The tax on dividends should have been cancelled starting with 2016, according to the Government’s variant of amendment of the Tax Code, yet the Senate only accepted an amendment that provides the taxation of the incomes from the dividends by 5pct.
Also on Wednesday, the deputies have approved the Tax Procedure Code.


FinMin Teodorovici: Early application of 19pct VAT depends on July budget amendment


The decision of introducing the 19pct Value Added Tax ahead of the planned date of January 1 2016 depends on this July’s budget amendment, Public Finances Minister Eugen Teodorovici said on Wednesday.
‘There will be a budget amendment in July and, depending on the sums necessary for this rectification, a decision will be taken (…) and if it’s yes, then when such a measure could be applied ahead of January 1 2016. Yet, as our current calculations look like, we intend to apply such a measure before January 1 2016. I could not say today when this will happen, because I wish to have the exact figures first; then we’ll see,’ said Teodorovici in a press briefing.
Given that the representatives of the European Commission have expressed publicly their reserves towards the effect of the VAT cut to 19pct, the minister explained that talks are under way with the EC officials to convince them of the sustainability of such a measure.
‘This doesn’t mean that Romania will not meet the assumed targets. (…) Every time the Government made a decision, especially in the economic area (…) concerns occurred several times even at national level – The Fiscal Council and the other partners – but things have shown they were wrong (…) I believe it is time for Romania to have a bold – and obviously responsible – approach to the expenditure in 2016. It is very important that this deficit level be below 3pct. (…) Some technical discussions were held at the Public Finances Ministry in order to show exactly from where we apply the offset measures,’ Teodorovici added


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