19.07.2022

THE ROMANIAN GOVERNMENT ADOPTED THE FINAL VERSION OF THE REGULATION AMENDING AND SUPPLEMENTING THE TAX CODE

The government adopted the final version of the regulation on amendments and additions to the Tax Code. Some measures will enter into force at the beginning of August, announced the Minister of Finance, Adrian Kuču.

"Today, we adopted the final version of the ordinance amending and supplementing the Tax Code. Some measures will take effect from 1 January 2023 and others from 1 August 2022. I will emphasize this balanced approach to fiscal reform, as there have been calls for a more radical approach. The government considered that, in view of the complex situation we are facing, making radical corrections in the fiscal environment would not be advisable and chose to continue its trajectory of supporting the business environment and consolidating honest business", stressed the finance minister.

He believes that some long-delayed fiscal measures have led Romania to enter an excessive deficit procedure in 2020.

"We announced at the beginning of this year that this reform will take place. This is a balanced adjustment, from our point of view, between the need to further support the economy and citizens and the protection, if you will, of Romanian capital, but also of employees' incomes, while continuing to sustainably provide medium-long-term fiscal-budgetary balance. After the preliminary conversation we had with the business, but also as a result of the political discussions within the coalition, a series of decisions were made, which were presented in the decisions on the amendment of the Tax Code, and this week the debates with the business environment continued; at their request, a series of corrections were made (...)," said Adrian Cutchu.

The changes, which take effect on August 1, include an increase in excise duties on tobacco (including heated tobacco) and alcohol, a reduction in the threshold for granting tax breaks in the food industry and construction from 30,000 to 10,000 Romanian lei (RON), repealing certain deductions for real estate transactions and returning to real value taxation.

The other changes to the Tax Code, which come into effect from January 2023, concern the 1% turnover tax for restaurants and food suppliers, thus removing the specific tax and reducing the threshold for micro-enterprises to €500,000. Tax on dividends will rise to 8 percent from the current 5 percent.

The VAT rate for drinks with added sweeteners or sugar is set to increase to 19 percent, while for restaurants, accommodation and catering the VAT rate will return to 9 percent.

According to the latest version of the draft regulation to amend the Tax Code, the financial effect on the revenue part is 1.19 billion RON this year and over 10.5 billion RON next year.