Romania's Government promises differentiated tax and VAT from 2013, in wake of fall elections

Romania might move a step away from flat tax next year, if the current Government's proposal to impose differentiated tax levels for personal revenues becomes reality. If the Social Liberal Union (USL) wins the elections in Romania this fall, it plans to introduce differentiated taxation, of 8, 12 and 16 percent for the revenues made by individuals, according to Prime Minister Victor Ponta.

The fiscal vision also includes differentiated VAT for agricultural products and plans to reduce contributions to social insurance. “As we took over a budget, while the IMF delegation was in Bucharest, we did not want them to leave without a letter of intent,”said the Romanian PM. Labor Minister Mariana Campeanu said lower tax rates will be applied to salaries below RON 1,600 starting next year. " The flat tax will still exist , but because we have certain people in poorer financial situations and because the minimum salary, in my opinion, is not high enough, we need to protect those, especially with shorter term contracts, from exceeding the minimum salary. For those earning up to RON 800, the tax will be 8 percent, 12 percent for up to RON 1,600 and 16 percent for salaries above that,”said Campeanu. The 16 percent flat tax was introduced in 2005, when the National Liberal Party (PNL) took over the governing. Now PNL is part of the ruling union USL. editor@romania-insider.com