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IMF Approves Romanian Flat Tax,
by Ulrika Lomas, Tax-News.com, Brussels 06 January 2005
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The Romanian government announced on Tuesday that the International Monetary Fund
has approved tax reforms that have ushered in a radical new flat tax.
A statement released by Prime Minister Calin Popescu Tariceanu following a
meeting with IMF representative Graeme Justice revealed that the fund viewed
the tax changes as “good fiscal policy”.
However, the IMF reportedly warned that Romania will have to tread carefully in order
not to exacerbate its budget deficit.
The reforms, the result of an emergency government decree in late December,
and introduced on January 1, replaced the multi-tier personal income tax system
and the 25% corporate tax with a single flat tax levied at 16%.
The new centrist government of Tariceanu is hopeful that the tax cuts will
attract foreign investment and smooth the path towards entry into the European
Union.
"The burdening fiscal policy which was in effect (is what) has stopped Romanian
companies from gaining capital and becoming competitive on foreign markets,"
the Prime Minister stated.
“We want, in the next years, the Romanian economy to become stronger and
to capitalize itself, so that it can face the competition once we enter the
European Union,” he added.
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