EY: Romania's new global household taxation would impact budget revenues

Replacing the individual income tax with a global household income tax starting January 1, 2018, would lead to a drop in budget revenues equivalent to 3.2% of Romania’s gross domestic product (GDP) next year, according to EY specialists, reports local Economica.net. The Finance Ministry is currently analyzing a new taxation system for the Romanians' revenues. Thus, the current 16% flat tax on individual income would be replaced by a 10% tax on global household income. The new taxation would also involve tax deductions for a series of expenses, according to statements made by Government officials. Another major change would be that Romanians would pay their taxes on income only after filing their tax returns. At present, the income tax on salaries, for example, is paid by the employers on behalf of their employees each month. “The new taxation system is a subject that’s not worth to be discussed at the moment (…) In 2018, if the current taxation system were replaced, the drop in budget revenues would be 3.2% of the GDP. This translates into 10% of budget revenues cut from the start,” said Gabriel Sincu, ‎Executive Director, Tax at EY Romania. He added that any fiscal change, especially a major one, can’t be carried out in such a short time and surely not before having a fiscal administration system strong enough to manage it. Romanian Finance Ministry: Global tax on household income, a concept under analysis editor@romania-insider.com