The Finance Ministry has published two important projects on its website: one for the modification of the Fiscal Code and the other for the modification of the Fiscal Procedure Code.
The main modifications that have been proposed are the following:
1. A decrease of VAT, for sustaining economy and middle-class income
- a. 20% as of January 1st 2016; 18% as of January 1st 2018;
- b. 9% for meat, fish, vegetables and fruit, as of January 1st 2016;
- c. Introduction of reverse charge for the delivery of buildings, building parts and land of any kind.
2. A decrease of the flat tax to 14% as of January 1st 2019 (both for income tax and corporate income tax);
3. A decrease of tax levels for operating microenterprises, in parallel with instituting penalties for microenterprises with no employees, as follows:
- a. 1% for microenterprises having more than 2 employees;
- b. 3% for microenterprises with a single employee
- c. 3% + RON 1530 quarterly, for microenterprises without employees
4. Dividend tax is ruled out as of January 1st 2016. This measure is meant to support the avoidance of double taxation, an increase in the competitiveness of Romania and keeping the capital in the country.
5. Excise duty is diminished for several types of goods, including petrol and diesel oil. Excise duty for alcohol, beer and sparkling wines (the greatest consumption rate is carried out from national production) is diminished, in parallel with an increase of excise duty for still fermentation drinks and beverages.
6. The social insurance rate shall be decreased for normal working conditions starting with 2017.
- a. The employee’s contribution is reduced from 10.5% to 7.5% as of January 1st 2017
- b. The employer’s contribution is reduced from 15.8% to 13.5%, as of January 1st 2017
7. An increase of the tax-free amount from pension income, which is deducted before income tax. At present, the tax-free margin is of RON 1000 and this shall increase up to RON 1050, as valid in 2016 and then by RON 50 for each tax year, until a value of RON 1200 monthly is reached.
8. An extension of taxable bases in case of health and social insurance contributions and levelling them to the maximum of 5 gross legal average salaries.
9. Building tax is eliminated as of January 1st 2016. This measure is necessary for an increase of investments and domestic competitiveness.
10. Employer’s costs for a professional and permanent training of employees are entirely tax-free.
11. Margins between which local authorities can decide regarding local taxes and duties are increased (for a higher decentralization of the power of decision).
12. Elimination of 19 types of taxes.
13. For those having lower salary income (of up to RON 1000 / month in gross amount) the level of personal deductions has been increased depending on the number of dependants (from a maximum of RON 650 / month to RON 800 / month).
14. Tax is reduced by 50% for hybrid vehicles.
15. The principle “in dubio contra fiscum” is introduced as a rule (in case of doubt regarding a tax regulation, interpretation shall take place in favour of the tax payer).