The Berlin Think Tank European Council of Foreign Relations (ECFR) published the 2018 edition of the EU Cohesion Monitor – an analysis of the cohesion… Mai mult›
Winter forecast: CNP radically adjusts economic growth. Observations on game of deficit, exchange rate, inflationv
The National Prognosis Commission (CNP), an institution under the government authority, radically changed the economic growth for 2017, from 6.1% in last autumn forecast to… Mai mult›
Average income trap – danger for Romania and CEE states: Setting growth engine on innovation is the only solution
In the absence of strategies to increase technological levels and raise wages, Central and Eastern Europe (CEE) will remain in the average income trap without… Mai mult›
According to the data published by Eurostat, Romania recorded the biggest decline in the gross energy consumption between 1996 and 2016 and the cumulated value… Mai mult›
How we stand with the money and on what we spend. A plus of 40% to personal income in four years, a 20% increase in GDP over the same period
The data published by the INS for the third quarter of 2017 show that the total average income of a household reached 3,426 lei per… Mai mult›
New and spectacular list of tax measures: income tax falls to 10%, solidarity tax is a contribution (2.25%), tax on turnover below EUR 1 million, contributions for independent activities calculated based on national minimum wage
de Victor Bratu , 30.10.2017
Without any further comments, we shall outline them below and we shall see whether the political decision will turn these figures into tax policies or not.
With a note: important figures are missing from the Ministry of Finance’s list, which should support the political considerations that are obvious, as well as the budgetary impact, which usually causes troubles for all governments.
Decisions announced by Minister Ionut Misa are:
- Increase the minimum wage from RON 1,450 to RON 1,550 (respectively to RON1,900 with the gross amount which will include the contributions currently paid by the employer). The measure would apply as of January 1, 2018
- Increase the pension point from RON 1,000 to RON 1,100. The measure will apply as of July 1, 2018
- Increase the minimum guaranteed pension from RON 520 lei to RON 640. The measure will apply as of July 1, 2018
- Cut the income tax from 16% to 10%, not only for salary income but also for other types of income such as pensions, rental income, interest rates, agricultural activities, copyrights, self-employment
- 70% increase in deductions for low paid Romanians. For the minimum wage, the amount exempted from tax will increase from RON 300 to RON 510. For people with children, an amount of RON 160 is added for each child (compared to RON 100 now)
- Transfer social contributions to the employee. Of the total contributions paid for the gross salary, 37.25% will be paid. In total, of the gross salary, 35% will be contributions paid by the employer on behalf of the employee. Contributions left to the employer, namely 2.75%, decrease to 2,25% and will cover the risks of unemployment, accidents, sick leave, salary claims. All these will be covered by a single contribution called “Work insurance contribution”
- CAS for particular work conditions decreases from 31.3% to 29%
- CAS for special work conditions decreases from 36.3% to 33%
- Independent activities (doctors, lawyers, notaries, journalists, writers, artists, etc.) will no longer pay contributions to the amounts obtained from these activities. Contributions will be calculated based on the national minimum wage.
- Companies with a turnover below EUR 1 million will pay a 1% tax on turnover instead of the current 16% corporate tax
- Businesses can no longer be criminally prosecuted for a VAT fraud unless there is material evidence that the respective entity has encountered tax evasion firms
Minister Ionut Misa also announced two measures to fight tax evasion or avoidance.
The first one is the implementation of the European Directive 1164 from 2016 on fighting profit shifting abroad by multinational companies. Through this directive:
- Deduction of interest will be limited
- A tax is introduced on the amounts transferred abroad by multinationals, to reduce their tax base
- Transfers between business groups to their subsidiaries from tax haven will be prevented
- No more tax benefits from abusive arrangements between companies will be granted
The second measure: the seizure of the means of transport (car, truck, ship, train, airplane) used by those who evade excise duties on goods, in addition to the seizure of the goods involved in evasion.
Putting announced measures into context: Tax Code – as an electoral poster
The Finance Minister’s intervention looked like the political speeches – important details of some measures are missing, important figures related to the budget impact are missing.
Instead, for each measure, there were repeated mentions such as “1.3 million Romanians will have more money in their pocket next year.”Additionally, the measures announced by the minister have been listed under the motto “Good measures for citizens and businesses” and the pages also contained “directing instructions” of the party’s communicators.
“PSD continues to be in the government that brings more money into Romanians’ pockets and helps the business environment. In 2018, millions of Romanians will have larger incomes, and hundreds of thousands of companies will pay lower taxes to the state,” is written in the main message that Ionut Misa should have read in front of the media present at the beginning of the government meeting on Thursday.
Lăsați un comentariu
AOAR: Solutions to imbalances produced by chaotic tax legislation - business environment reaction to a slander from a minister
The Businessmen's Association of Romania (AOAR) proposes a series of solutions to get out of the "chaos" of the fiscal and revenue legislation adopted last… Mai mult›
The Government approved on Thursday the OUG comprising the measures needed to preserve net wages that professional groups exempted from income tax and part-time employees… Mai mult›
Romania needs to adopt a different economic model if it wants to avoid a crisis caused by the current consumption boom, according to Matteo Patrone,… Mai mult›
According to the perception of managers from the field, the manufacturing industry will register a relative stability of production volume in the following months (conjuncture… Mai mult›
The Romanian Business Leaders (RBL) Macroeconomic Confidence Index, of 52.3 points, shows that the entrepreneurs and executives from the most important businesses in Romania have… Mai mult›
UPDATE: In a statement issued to RFI, OLAF confirmed the investigation at Metrorex, and its topic - the Metro Line 5 (M5) financed by European… Mai mult›
The Ministry of Finance is trying to take advantage of the still favourable conditions for emerging government securities and goes on the Eurobonds market with… Mai mult›
The total volume of loans planned by the Ministry of Finance (MFP) for 2018 amounts to about RON 74 billion. Loans are to be secured… Mai mult›
Pessimistic expectations about the future in latest CFA Romania research - economists anticipate a decrease of personal incomes and continuous depreciation of Romanian leu
In December 2017, the macroeconomic confidence indicator of CFA Romania declined to 41 points, the lowest value since April 2013, by 3.1 points below the… Mai mult›
BNP Paribas, the largest French bank and the second largest in the EU by the size of assets, will launch its retail operations in Romania… Mai mult›
The BNR will impose restrictions on credits to the population, to anticipate potential non-payment risks. This could happen in March if the project is approved… Mai mult›
The European Parliament will run debates on the situation of justice in Romania in the next plenary session, in February, in the Strasbourg plenary. The… Mai mult›
The Government approved in the last meeting a memorandum stating that the state will use its preemption right at Mangalia Shipyard and buy the 51%… Mai mult›
First major acquisition in 2018 - MApN signs contract with General Dynamics to acquire 227 armoured carriers
Minister of National Defence, Mihai Fifor, participates Friday at the signing of the procurement contract for 227 Piranha V armoured carriers, a release of the… Mai mult›
Business environment: Waiving governance rules in state-owned companies, another measure that deepens feeling of distrust
The Foreign Investors Council (FIC) released on Wednesday a statement that expresses its dissatisfaction with the "authorities’ political agenda" containing decisions that "will lead to… Mai mult›