New Fiscal Code draft and new stipulations: some tax cuts, greater benefits to budget


The flat tax will be cut by 2 percent from 16 percent to 14 percent as of January 1, 2019, Finance Minister Darius Valcov announced on Wednesday in the Government meeting where draft amendments of Fiscal Code and Fiscal Procedure Code were presented.

He said that the net budgetary impact for 2019 is estimated at RON 2.5 billion and the surplus economic growth will stood to 0.5 percentage points.

Also, he said the standard VAT rate will drop from 24 percent to 20 percent starting with January 1, 2016 and to 18 percent from January 1, 2018. Starting next year also, the standard VAT rate for meat, vegetables, fish and fruits will decrease to 9 percent.

According to authorities, gross budgetary impact of applying the 20 percent VAT rate in 2016 will be of RON 11.6 billion.

Regarding the benefits to budget is expected a VAT revenues recovering, social contributions, payroll tax, etc. amounting RON 6.4 billion. In the economy is expected an additional increase of about 1 percent. Moreover, the number of jobs could rise by 145,000 in 2016, 75,000 in the coming years respectively.

The government aims at stimulating business environment due to better cash flow streams and reducing tax evasion, which is estimated at annual additional revenues of EUR 500 million.

According to the new Fiscal Code draft, all individuals with incomes will have to pay the social security (CAS) and health insurances contributions (CASS). Starting with 2017, the share of social insurance will decrease both at employee from 10.5 percent to 7.5 percent and at employer, from 15.8 percent to 13.5 percent.

SMEs will have to pay a tax whether they have or not employees. The firms with one or more employees will pay 3 percent of turnover, 1 percent respectively, and those who have no employees will quarterly pay 3 percent plus an amount of RON 1,530.

Not the least, dwellings tax will not be limited to 0.1 percent of taxable value, but will be set between 0.08 percent and 0.2 percent by mayoralties and the owners who do not care their homes and/or land shall pay a tax of six times higher than the standard level as of January 2017.

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