Applying a 1 percent turnover tax will mainly affect low-profit or loss-making companies, and the increase of the minimum wage, along with employer-to-employee transfer of the contributions, means additional costs for the employers, PwC analysts estimate, as a press release informs.
”Practically, the companies with a profit rate of less than 6.25 percent on the turnover, will have to pay a higher tax than they do today. In this category of companies with a turnover of less than EUR 1 million, there are about 80 percent of the companies registered in Romania,” Mihaela Mitroi, PwC Tax and Legal Services Leader, Romania and South Eastern Europe, explained.
As regards the transfer of social contributions to the employee, PwC notes that the normative act does not provide for a mandatory increase in gross wages for all employees to maintain the current amount of net salary, which PwC has already signaled that it’s not legally possible.
”Therefore, the application of this measure on a non-uniform basis at national level may lead to imbalances in the labor market. It is also considering the increasing of the minimum wage from RON 1,450, as it is currently, at RON 1,900. Taking into account the transfer of social contributions to the employee, this implies an additional cost for employers of about RON 120,” the release reads.
PwC points out that the authorities also announced several measures with a potentially positive impact on the business environment, such as reducing the income tax rate to 10 percent. This would apply to both earnings, income from pensions, rents, interest, agricultural activities, independent income and copyright. Other beneficial measures include keeping the CAS ceiling for authorized individuals, as well as the increasing of personal deductions for low-income people.