RO Govt. ponders phasing out “excessive fiscal allowances”

Romania’s Government plans to gradually phase out the “excessive” fiscal incentives and refrain from introducing others, according to a document published by Profit.ro and confirmed by prime minister Florin Citu.

The fiscal and policy reforms, included in the “Flagship reforms of the Romanian Recovery and Resilience Plan” and scheduled for completion by 2024, are going to be supported by EUR 360 mln “funds” (grants or soft loans) from the European Union for investments in the digital systems of the Ministry of Finance, tax collection agency ANAF and the National Customs Authority, according to the document.

“We have to make an analysis to identify which [incentives] are excessive, which stimuli are above average, and then we will make a decision," said prime minister Citu.

The plans are positive for boosting the budget revenues - a key issue followed by all the rating agencies and analysts, which has remained unanswered so far. The Government has constantly stressed that it is not going to increase the tax rates or introduce new ones.

According to a more detailed outline of the actions included in the document, Romania’s Government will carry a comprehensive analysis of the tax system to identify “distortions” from which it can generate incomes to budget.

The first areas to be investigated are those of income tax, profit tax and social contributions. It will freeze the number of goods and services for which the state charges preferential VAT rates (9% or 5%).

The excessive tax incentives, particularly regarding profit tax, income tax and social security contributions, will be withdrawn. The principles of property taxation, mainly concerning different tax regimes depending on the nature of the owner, natural person or legal person, will be revised.

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