Romania’s political parties agree to cut VAT rate to 20%

The main Romanian political parties met on Thursday and decided to cut the VAT rate from 24% to 20% starting January 1, 2016, and to 19% starting 2017. The new Fiscal Code’s initial form, which was approved by the Parliament but rejected by President Klaus Iohannis, included the VAT rate cut from 24% to 19% starting January 1, 2016. Iohannis sent the code back to the Parliament for review, due to the high negative impact of the fiscal relaxation measures on next year’s budget. The National Liberal Party PNL has agreed with the VAT rate cut in two steps and has signed a technical agreement, which will represent the support for the political vote in the Parliament. However, representatives of the Alliance of Liberals and Democrats for Europe in Romania party said they supported the reduction of the VAT rate to 19% because the psychological impact was very important. They haven’t signed the technical agreement yet, and will decide within the party. Prime Minister Victor Ponta said on Wednesday that the President Klaus Iohannis also agreed with the VAT cut to 20%, but asked for the extra excise and the fee to special constructions to be removed at a later stage. The final vote on the reviewed Fiscal Code should take place at the end of August. Romanian PM: President agrees with VAT rate cut to 20% Romania’s Parliament, called from recess to review the fiscal code Romania’s President rejects new Fiscal Code, sends it back to the Parliament for review The IMF warns that unrealistic fiscal relaxation could endanger Romania’s hard-earned macroeconomic stability Romania’s Foreign Investors Council supports new Fiscal Code editor@romania-insider.com