Romania Introduces Corporation Turnover Levy Within 2009 Budget

by Ulrika Lomas, Tax-News.com, Brussels

15 April 2009

Romanian Prime Minister Emil Boc has announced details of the final draft of Romania’s 2009 budget following amendments to provide for the mitigation of tax evasion. The amendments were necessary following a EUR20bn aid-package agreement with the IMF and European Commission.

Announcing the budget Boc said:

“The most important taxes do not change. In other words, the sixteen percent flat tax does not change. The value-added tax stays at nineteen percent and does not change. I remember that in many countries that concluded an agreement with the IMF domestic taxes changed, actually they increased. In Romania it is out of the question to increase any of them.”

Within the budget the corporation tax system will undergo a marginal amendment. From May Romania will enforce a alternative minimum tax based on companies' turnover, designed to levy tax on supposedly loss-making enterprises the better to fight tax evasion. The tax will range from EUR500 to EUR10,000 depending on the businesses' turnover. Companies making profits will pay the standard 16% corporation tax rate.

Boc has also underlined that the government aims to remove taxes on reinvested profit as well as lowering the number of taxes, charges and fees. The government is also to address a long-standing problem surrounding VAT rebates - many companies have re-domiciled to neighbouring countries recently where the process is more efficient.

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