Fiscal measures under debate in Parliament

The Romanian Government introduces new taxes, fees and contributions for employees and employers as of January 1, 2018

Daniela Budu, 24.10.2017, 13:29

Romanian Finance Minister, Ionut Misa, said on Monday in a plenary session of the Chamber of Deputies that the Split VAT, or the spaced-out payment of the value added tax, which will be introduced next year, will be mandatory only for companies undergoing insolvency procedures or for business with poor credit record. Misa said the measure is intended to reduce fiscal fraud, but the opposition called for completely abandoning the idea of introducing the Split VAT.

Minister Misa explained that Romania registers a new record low among EU member states as regards the difference between the volume of the VAT which should go to the state budget and that which is collected in reality. Misa also underlined that, when introducing the Split VAT measure, the ministry takes into consideration the requests made by the business environment.

Ionut Misa: “Taxpayers who are now paying the VAT to the state budget will thus be favoured by the elimination or the significant limitation of unfair competition from other taxpayers who do not pay their contributions to the state and use financial resources like the VAT to reach other goals.

The ministers stand has been backed during the debates by the parliamentary groups of the Social Democratic Party and the Alliance of Liberals and Democrats in Romania. On the other hand, the opposition called on the government to abandon the idea of introducing the Split VAT.

Liberal MP Lucian Ovidiu Heius: “The government decree has stirred panic in the business sector and its enforcement runs the risk of blocking the Romanian economy and of pushing into bankruptcy tens of thousands of companies, SMEs in particular. Under this decree, we practically transfer the governments incapacity to administer the VAT collection into the taxpayers responsibility.

The leader of the National Liberal Party, Ludovic Orban, has said the measure created panic among business people and called on the Prime Minister to sack the finance minister.

In turn, Peoples Movement Party MP Eugen Tomac called on the Finance Minister to step down: “Out of despair about the poor budget revenue rate you have come up with new taxes which might block the Romanian economy, drive away investors, with the Split VAT as the biggest such invention of the Social Democratic Party.

In turn, the Democratic Union of Ethnic Hungarians in Romania calls for the withdrawal of the ordinance on Split VAT, which-in the opinion of MP Istvan Erdei will impact the business environment. In response, Social-Democrat MP Marius Budai claims that all important measures concerning the business environment are brought under public debate.

Marius Budai: “The opposition claims the government does not take clear measures to curb tax evasion. It is also the opposition which criticises poor tax collection, and when the government comes up with measures to reduce evasion, improve tax collection, you accuse us of affecting the business environment.

The Romanian Governments plans for 2018 also include, among other contributions and taxes, a controversial solidarity tax to be levied on all employers in Romania who will have to pay 2% of the gross salary fund to the state budget.