Romania to offset budget loss from lower VAT for bread with excises for luxury products from September

Romania will apply a lower Value Added Tax (VAT) on bread from the beginning of September, but will up the excises for alcohol, and introduce excises for luxury products to offset the budget loss. The new VAT for bread will be of 9 percent, compared to the 24 percent VAT in Romania. The aim is not to help reduce the price of bread, but rather to halve the tax evasion in the bread making segment, and to cut by 80 percent the tax evasion on the general pastry making segment. The drop will cause a budget loss of some EUR 23 million, which the Government hopes to offset by applying excises on luxury goods, such as cars with an engine capacity over 3,000 cc, jewelry, gold and sailboats. The new excises is expected not only offset the loss via the VAT drop, but bring an additional income as well, some EUR 45 million extra to the state budget. The excises for gold and platinum will be of EUR 1 per gram for up to 14 K, and EUR 2 per gram for above 14K. Wedding rings will be exempt from this excise however. For cars, an EUR 1 excise per cc will be introduced for new and used cars whose engine capacity exceeds 3,000 cc. Fur coats will also be subject to excises, of EUR 50 per piece for products valued between EUR 500 and EUR 1,500, and with EUR 200 a piece for values between EUR 1,501 and EUR 3,000. Above EUR 3,000, the excise will be of EUR 450, and above EUR 4,500, of EUR 750. The highest excise, EUR 1,200, will be applied for fur coats valued above EUR 6,000. Hunting weapons or weapons for personal use will also be among the products where an excise will be applied. The excise will range between EUR 50 and EUR 1,500 per weapon, depending on its value, while bullets will also be applied an excise between EUR 0.1 and EUR 0.4 a piece. For sailboats at least 8 meters long, a EUR 500 excise per linear meter will be applied. The excise on alcohol will go up from EUR 750 per hectoliter to EUR 1,000 per hectoliter from the beginning of September, which will most likely make drinking alcohol a more expensive activity in Romania. editor@romania-insider.com