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Romania Drops Solidarity, Turnover Tax Proposals

by Ulrika Lomas, Tax-News.com, Brussels

26 July 2017


The Romanian Government has scrapped controversial plans to introduce a solidarity tax on high incomes and replace corporate income tax with a turnover tax.

The Social Democrat Government had previously proposed a solidarity tax on monthly incomes exceeding RON13,600 (USD3,470) as part of its Program for Government. However, Prime Minister Mihai Tudose announced at a press conference on July 25 that the proposal had been dropped because it would increase the tax burden and be "difficult" to implement.

Tudose's announcement came just days after another significant tax proposal, a turnover tax on corporate revenue, was also cancelled. Under this measure, the existing 16 percent flat tax on corporate income would have been replaced by a progressive turnover tax of one to three percent.

The turnover tax proposal was heavily criticized by business representatives, including the American Chamber of Commerce in Romania, which warned that it could cause "turmoil" in the business climate.

"Such [a] mechanism is generally used as a tax simplification procedure for startups and small businesses. Moreover, the proposed measure conflicts with the [proposed EU] Common Consolidated Corporate Tax Base, thus placing Romania outside the mainstream EU countries," it said.

TAGS: tax | small business | business | corporation tax | Romania | individual income tax | Tax

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