Fiscal Code Amendments

As of August 1, new amendments to the Fiscal Code take effect in Romania

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Roxana Vasile, 01.08.2022, 14:00

In times of crisis, taxes and charges should not be raised. This is a rule often mentioned by economic analysts and politicians.

These days however, burdened by a two-digit inflation rate prompted by skyrocketing energy and natural gas prices, Romanians are finding it increasingly hard to cope. And they fear they will be unable to pay their bills this coming winter. Under these circumstances, additional taxes and charges only manage to bring people down even more.

Asked recently about the amendments to the Fiscal Code that are taking effect on August 1, the president Klaus Iohannis said they do not introduce new taxes, but that they address situations that had not been properly regulated before. More precisely, this is about taxes introduced in other circumstances, perhaps without proper discussion or analysis, and it is now necessary to revisit them, to make things more transparent and fair, and thus to ensure better collection of state budget revenues. Better collection means less tax evasion, president Iohannis argued.

That said, following the decisions made recently by the coalition government made up of the National Liberal Party, Social Democratic Party and the Democratic Union of Ethnic Hungarians in Romania, as of August 1 tobacco products will be more expensive, ceilings for certain tax exemptions will be lower and the tax on gambling gains will be higher.

To go into more detail, as of Monday, whether they smoke classical or electronic cigarettes, Romanians will pay more, as the tobacco excise duty is raised. The decision, the authorities say, was made in order to avoid an infringement procedure against Romania for the inadequate transposition of EU legislation in this respect.

The prices of alcoholic beverages also go up. According to the finance minister Adrian Câciu, the excise duties for alcohol had not been updated since 2015.

As for gambling gains, a higher tax will be levied, ranging between 3% and 40%.

Changes are also operated as regards salaries in the construction industry, agriculture and the food industry, where the ceiling for certain tax rebates will be lowered from EUR 6,000 to EUR 2,000 per month.

Also beginning on August 1, for a part-time employment contract, employers will have to pay taxes corresponding to a full minimum salary, which triggers concerns that many small companies might be forced out of business or resort to illegal employment.

Even more changes to the Fiscal Code will take effect on January 1, 2023. For example, in the hospitality industry VAT will be raised from 5 to 9%, while the VAT for non-alcoholic beer and for sugary drinks will be raised to 19%. Property taxes will also be calculated on a new methodology. (AMP)