The Romanian Government estimates that the VAT reduction to 9% for food, soft drinks and food services will have an impact of EUR 4.1 billion on the budget by 2018.

The impact will be covered by the additional collection carried out by Romania’s Tax Authority ANAF and the multiplier effect.

For the second half of the year, when the VAT cut will come into force, the impact on the budget will amount to some EUR 553 million. In 2016, the budgetary impact will reach EUR 1.1 billion, in 2017 it will amount to EUR 1.08 billion and in 2018 it will reach some EUR 1.3 billion, reports local Mediafax.

The Government estimates that budget revenues will increase due to the effects generated by the VAT cut, such as the growth in investments and jobs.

The Romanian Finance Ministry will send a team to Washington next week to discuss the new fiscal measures with International Monetary Fund, European Commission, and the World Bank representatives.

editor@romania-insider.com