Happy New Year! 2016 starts with tax cuts in Romania
The new year will bring three important tax cuts in Romania. Not only the VAT rate will be lower starting January 1, 2016, but also the tax on dividends and the tax on small companies’ revenues. The New Year has brought several tax cuts in Romania benefiting consumers, small firms as well as those who receive dividends, according to local media reports.
A cut in standard Value Added Tax (VAT) rate to 20% from 24% as of 1 January 2016 will cost the state budget about RON 8 B (EUR 1.7 B) in revenue, according to romania-insider.com.
Additionally, VAT on foods in Romania was cut to 9% from 24% in June last year.
A drop of RON 1 B (EUR 221 M) in budget revenue is expected to result from the lowering of tax on dividends to 5% from 16%.
In a bid to boost employment, the Romanian government has also cut income tax for micro businesses. Small firms with at least two employees will pay income tax of 1%, those with one employee - 2%, while those who hire no employees will pay 3%.
Starting from 2016, the ceiling for the income made during the fiscal year, at which an individual is able to register as a micro enterprise in Romania, has increased from the equivalent of EUR 100,000 from EUR 65,000. If the income exceeds EUR 100,000, the company will have to pay profit tax of 16%.