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New governing programme: Profit tax to be replaced by tax on turnover, sources say. Solidarity tax expected, VAT at the same level

The new governing programme provides, among other fiscal and budgetary measures announced, one measure that will have an impact on all companies in Romania, which will no longer be taxed according to the profits, but on the turnover, hotnews.ro informs.

“We will introduce tax for all companies in Romania (tax on turnover) as of January 1, 2018. This tax will replace the profit tax and will have 2 or 3 levels of taxation”, reads the governing programme of the Mihai Tudose cabinet, according to political sources.

The levels for these two to three tax stages are not specified in the document.

The measure will particularly affect businesses that have high turnover but are working, due to the sector’s specificity or other reasons, with low profit margins.

An example might be in the supermarket sector, a type of business that generally works with enormous turnover but with low profit rates, because it is a business in a typically very competitive field.

PNL Senator Florin Citu says the enforcement of this measure will make companies to move their headquarters to other countries of the European economic bloc.

Solidarity tax – For monthly earnings above RON 14,500

The Solidarity tax will be applied to those with monthly earnings of at least 10 minimum salaries (RON 14,500), political sources close to the new government programme say. For the time being, it is not known what will be the quantum of the future ‘solidarity contribution’, a working group with the Finance Ministry dealing with several scenarios, sources have told hotnews.ro. The idea of such a tax came in 2012, when the prime minister was Victor Ponta, but it was not applied. In addition, the solidarity tax only targeted the state employees, now the tax will be applied to all Romanians with monthly salaries of over RON 14,500.

VAT remains at the same level in 2018

“The government will propose the VAT cut from 19% to 18% as of January 2019. We will have the second lowest VAT level in the EU, after Luxembourg (17%). The 5% VAT level will be extended for housing and for agricultural inputs, as of January 1, 2018,” the governing programme reads.

It also reads that, as of September 1, an improved mechanism on VAT collection will be established (split Payment), according to the Italian pattern, which is expected to cut almost entirely the VAT tax evasion.

Global income tax as of 2018

“Starting with 2018, we will reintroduce the overall income tax (IVG) at the level of the natural person. The implementation of this fiscal mechanism will be done through the integrated IT system organized at ANAF level, which eliminate the waste of time for the taxpayers. The incomes lower than RON 2,000/month will be exempted from taxation and more deductions will be introduced to encourage savings, investments and increase of the health standards and education for the population. Also as of 2018, we will implement the procedure for submitting heritage declarations,” the governning programme reads, according to sources quoted by ziare.com.

.No more than 10 taxes

As of January 1, 2018, the number of taxes, tariffs and fees will be below 50.

The citizens will have 10 taxes to pay at the most, of which the health security insurance (CAS), the social security insurance (CASS), tax on land, on real estate, on cars, the solidarity tax, the road tax. The other taxes will be eliminated.

For companies, the number of fiscal and non-fiscal taxes will be 40 at the most. In order to achieve these decisions, the government will present, no later than September 1, 2017, the tax nomenclature in Romania. At the same time all the taxes, tariffs, fees will be eliminated. One of the indirect taxes is the VAT,” the governing programme reportedly reads.

 

About Valeriu Lazar