Romania could have a differentiated, lower Value Added Tax VAT on bread, should the Prime Minister Victor Ponta's recent proposal become reality. Ponta wants to introduce a 9 percent VAT on bread, much lower than the general 24 percent VAT across all the other products, which is the second highest VAT rate in the EU.

The measures to introduce the 9 percent VAT on bread could be introduced this summer, after the Government gets the financial data from the first half of the year, sometimes towards the end of July. “I am determined, I have talked to the Finance Minister as well, to find the needed resources and introduce the 9 percent VAT for bread. It will not work unless applied throughout the entire production chain for bread. We tried, but it is the only solution,” said Ponta during a TV show.

This is one of the two planned changes, together with the micro enterprise tax, which have already been approved by the Parliament, according to Ponta. The Government could then issue an emergency ordinance to introduce both the new VAT for bread and the flat tax rate for micro enterprises, as well as the drop in tax rate from 3 percent to 1.5 percent for micro enterprises. Several proposals and ideas have been publicized by various members of the Government for the change in micro enterprise tax, and business people were supposed to also be consulted, so something certain is yet to be announced.

editor@romania-insider.com