Happy New Year! 2016 starts with tax cuts in Romania

The new year will bring three important tax cuts in Romania. Not only the VAT rate will be lower starting January 1, 2016, but also the tax on dividends and the tax on small companies' revenues. Thus, starting Friday, all the products in Romania will be cheaper as the standard VAT rate will drop from 24% to 20%. This measure, which is a good one for the consumers, will have an impact of RON 8 billion (some EUR 1.7 billion) on the state budget, reports local Digi24. Some of the local stores have already started selling products with a VAT of 20%. Those who receive dividends will also pay lower taxes as the tax on dividends will drop from 16% to 5%. This measure will also affect the state budget, bringing a revenue drop of more than RON 1 billion (EUR 221 million). The small business in Romania will also start the year with some good news. Those who have several employees will pay an income tax of 1% while those with no employees will have to pay a tax of 3%. In June this year, the Romanian Government cut the VAT on food from 24% to 9%. Romania’s Parliament approves the new Fiscal Code for the second time this year Romanian President, central bank governor oppose PM’s Fiscal Code No flat tax and social contribution reductions in Romania’s new Fiscal Code Romanian Government cuts VAT on food to 9% Irina Popescu, irina.popescu@romania-insider.com