Despite the assurances of the Romanian officials, it seems that Romania is moving faster towards higher or even new taxes. According to Adrian Vasilescu, the National Bank of Romania’s governor’s councillor, there is high time to increase taxes.
Adrian Vasilescu affirmed that he believes Romania will go toward higher taxes on a local TV channel. Currently, Romania ranks last in the European Union in terms of GDP taxation.
Interest rates are rising, there is a worldwide period of rising interest rates, in fact, there is a transfer, a transition from the great relaxation with which the major Central Banks got used to in 2012 and before this crisis to the great tightening.Adrian Vasilescu, the NBR governor’s counsel
On May 17, the PSD – Social Democratic Party leader Marcel Ciolacu confirmed the announcement that the tax code would be revised. The measures will be presented on June 1.
This announcement was expected since the National Recovery and Resilience Plan (PNRR) was introduced. In other words, tax reforms are theoretically prepared.
Unfortunately, the bad news does not stop here. Among other things, the fiscal reform that will be implemented this year concerns the Romanian population even more.
What does this fiscal reform entail?
The journalists from the Romanian local news platform Hotnews analysed the situation in detail.
The threshold for micro-enterprises will be reduced. As a result, the PNRR argues that the amendment, which gradually decreases the scope of the microenterprise particular tax system, must take effect.
The new law will gradually change the Fiscal Code to diminish the scope of the micro-enterprise particular tax system gradually. The lowering of special provisions begins in the first quarter of 2023 and finishes in the fourth quarter of 2024.
Tax exemptions and incentives will be eliminated. According to PNRR, an analysis must be conducted to gradually eliminate fiscal incentives and fiscal gaps in terms of income tax, profit tax, and corporate tax (including special regimes that may be subject to derogations). This year’s deadline is in the fourth quarter. In other words, it refers to the elimination of services such as building, information technology, and a specific tax in Horeca, among others.
Property tax changes. Regarding the property tax, PNRR states that the proposal must be publicly debated by the end of 2022, with a phased implementation.
In other words, the revision of property tax principles, particularly concerning the various building tax regimes based on the owner’s status (legal or natural person), is designed to resolve the potential arbitrage between the two tax systems. Taxation of natural and legal people who earn money from real estate and the automatic calculation of the taxable value of properties subject to municipal taxes. According to PNRR, the goal is to end the practice of employing a tax base that is not tied to market value.
Progressive tax. Experts say that the progressive tax will not be presented this way as of June 1 because it will be hard to implement from 2023 due to its complexity.
On the other hand, Marcel Ciolacu remarked that he continues to support the progressive tax and that the required deductions will be made.
The moment you introduce the progressive tax, I give you an example, only in the health area is the health insurance, the life insurance, to be deductible so that that income is not taxed. Moreover, we have an amount for health and life insurance that goes to Pillar III. Furthermore, we have an economy due to these insurances, the Insurance House, the state budget, the private health servicesMarcel Ciolacu, PSD leader
It’s unclear what will happen to the progressive tax, whether it will be implemented, and the deduction scheme for education, childcare, transportation, and other services.
In addition to fiscal reform, rising inflation is a much more worrying factor nowadays. The National Bank of Romania (BNR) has raised its inflation forecast to 12.5% by the end of the year, with 6.7% expected by 2023.