On the back of stronger economic growth and lower inflation, Romanian Finance Minister Mihai Tanasescu announced on Tuesday that the government plans to cut both corporate and personal income taxes.
Following forecasts of GDP growth of 5.25% next year, and supported by expected growth of 5.5% this year, Tanasescu said the cut in corporate profit tax is likely to be from the present 25% down to 19%, whilst the top rate of personal income tax will be cut from 40% to 38%, and the lower rate from 18% to 14%.
The tax cuts are part of the Romanian government’s attempt to bring its economy more in line with EU standards, as it hopes to join the Union by 2007. It is anticipated that the measures will receive parliamentary approval in September of this year.
The cuts in tax are not expected to have an adverse impact on the country’s budget deficit.
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