Romanian Government To Delay Car Registration Tax

by Tatiana Smolenska, Tax-News.com

24 November 2008

The Romanian government has decided to suspend the implementation of the first car registration tax in Romania until January 1, 2010.

The move is part of government efforts to protect jobs within the country’s car making industry. However, the exemption will only be applied to new cars; cars currently in circulation will remain subject to the tax.

Romania must seek permission from the European Commission before it can go ahead with the measure.

The government hopes the exemption will help the Romanian car production industry, which has recently been hit heavily by imports of foreign second-hand cars – the industry has seen a massive 30% drop in sales during October this year compared to October 2007. The government is hopeful that the new initiative might help reverse the trend by encouraging the purchase of new cars.

Many companies have recently been forced to temporarily freeze operations due to a lack of demand - many workers have been sent home and heavily hit factories have had to close down for as much as two weeks at a time to reduce overheads.

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