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New ruling programme: Turnover tax to replace profit tax, VAT cut to 18 percent delayed to 2019
The profit tax could be replaced by a turnover tax in two-three stages as of next year, according to the new ruling programme.
As for the profit's taxation, the authorities consider in the energy sector, an additional taxation, by at least 20 percent, of the profit obtained from natural resources extracted and unprocessed in Romania.
The diminishing of the value added tax (VAT) on the other hand, is postponed until 2019, and the 5 percent reduced quota will be extended from 2018 for the sale of houses smaller than 120 sqm and for agriculture inputs.
"We count on 50,000 new jobs in constructions, following our proposition of VAT cut through houses' sale," the document reads.
All the laws covering the economic field will be included in Romania's Economic Code that is to be passed at the latest by 1 July 2018. The legislative code will comprise the Tax Code, the Tax Procedure Code, the Law on Establishing Commercial Companies, the Tax Evasion Law, and all the other economic laws.
"Prevention will be one of the main principles of Romania's Economic Code. Which is why we shall pass the Prevention Law by 1 October 2017. This actually means that an economic operator could not be sanctioned anymore, if it has not been previously guided and afterwards prevented. Practically, we put aside the red card it used to be given and replace it with two yellow cards," the new ruling programme adds.
Accoding to Reuters correspondent, the tax overhaul includes changing the flat tax on income and profit, scrapping a dividend tax, cutting social security contributions, granting deductions to some categories, and additional levies for oil and gas companies.
Loose fiscal plans have worried the European Commission and the International Monetary Fund over missing budget targets. The Commission expects Romania to run the EU's largest deficits this year and next at 3.5 percent and 3.7 percent of GDP.The plans also mention introducing a "solidarity contribution" from 2018, without elaborating. The programme does not include an impact assessment.
It plans to replace the corporate tax on profit with a multi-levelled levy on turnover.
Income tax would fall to 10 percent, but revenue of less than 2,000 lei ($502.29) per month will not be taxed.
Social security contributions will be cut by 4.25 percentage points to 35 percent but they will be paid solely by workers, not their employers.
Fiscal worries are likely to weigh on the leu currency, which fell to a five-year low this month but was flat on the day at 0830 GMT.