Gov’t cuts VAT to 9 pc for agricultural services

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The government decided on Tuesday to cut the VAT from 20% to 9% for fertilizers, seeds and agricultural sector specific services, the impact on the budget this year would be of around RON 65.8 million, Finance Minister Anca Dragu said on Tuesday in a briefing at Victoria Palace.

“This measure is in line with the acquis communautaire in the field and is likely to create the prerequisites to stimulate the persons involved in agriculture, to increase accessibility to goods and services used in agriculture, to facilitate new investments in agriculture, to conduct in optimal conditions, the investment programmes with the EU non-reimbursable funds in agriculture. The budget impact for this year would be of about RON 65.8 million (approx. EUR 14.6 million – our note), and for 2017 we estimate an impact of RON 190.9 million (approx. EUR 42.4 million), for 2018 – RON 203.3 million (approx. EUR 45.2 million),” Dragu said.

According to the Minister of Finance, this measure is important for reducing tax evasion in the VAT field and in agriculture in general.

“I can (…) say that we believed from the very beginning that agriculture has the potential to be exploited, the share of agriculture in GDP is only 4.5%, while other areas, such as industry, accounts for 22.5%. According to our surveys, the agriculture’s share in the GDP is much smaller as compared to European countries with which Romania can make a comparison. As such, we made these decisions in order to stimulate agriculture so that it becomes an additional factor of economic growth,” Dragu added.

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