Tax Code draft amendment: Lowering threshold for micro-enterprises, higher VAT on sugary drinks and Horeca, increased dividend tax

The Ministry of Finance published on Monday night the draft amendment to the Fiscal/Tax Code, which provides, among other things, the increase of the dividend tax from 5% to 8%, the decrease of the income threshold up to which a company is considered a micro-enterprise, the 9% increase of VAT for beverages of non – alcoholic beverages containing added sugar or other sweetening matter or flavored and excise duty on cigarettes.

Regarding the taxation of micro-enterprises, the project proposes to reduce the income ceiling obtained in the previous year, from one million euros to 500,000 euros, but also to establish the condition that the micro-enterprise has at least one employee. Currently, tax rates are differentiated for micro-enterprises according to the number of employees, with a rate of 1% applicable if the micro-enterprise has at least one employee and a rate of 3% if the micro-enterprise has no employees. Given that, according to the new project, micro-enterprises will be required to have at least one employee, the tax rate of 3% is eliminated.

The draft also eliminates the possibility of applying the profit tax if the conditions related to the value of the share capital and the number of employees were met. In terms of VAT, the increase in the quota for beverages containing added sugar is intended, according to the cited document, to discourage the consumption of such products, with a significant impact on the health of consumers.

Also, starting January 1, 2023, the VAT rate will increase from 5% to 9% for both the delivery of food, including beverages (excluding alcoholic and non-alcoholic beverages containing added sugar or other sweetening matter or flavored ), intended for human and animal consumption, as well as for restaurant and catering services and for hotel accommodation activities.

The draft Ordinance proposes to increase the excise duties for cigarettes, starting with August 1, 2022, from 563.97 lei / 1,000 cigarettes to 594.97 lei / 1,000 cigarettes, as well as to adopt a new calendar of gradual increase of the level of the total excise duty for cigarettes.

The draft normative act also proposes the revision of the regulation on the granting of fiscal facilities in the construction sector, as well as in the agricultural sector and in the food industry in the sense that only natural persons who obtain income from salaries and assimilated to salaries the basis of individual employment contracts concluded with employers that fall under the conditions provided in art. 60 point 5 and point 7 of the Fiscal Code. In these sectors, it is proposed to lower the ceiling up to which the fiscal facilities are granted, respectively from 30,000 lei per month to 10,000 lei per month, included.