Romania Should Avoid Further Tax Cuts: IMF

by Ulrika Lomas, Tax-News.com, Brussels

05 June 2017

Noting a substantial drop in the tax burden in Romania, the International Monetary Fund has called on lawmakers to avoid further tax cuts.

The IMF said that successive tax burden-cutting measures, impacting value-added tax (VAT), fuel excises, and health contributions had resulted in a drop in revenue worth nearly 2.5 percent of GDP over 2016 and 2017.

It added that plans by the Romanian Government to further reduce taxes in 2017 and 2018, including further cuts to VAT, an expansion of VAT exemptions, and reform of personal income tax rates, "will put considerable pressure on the budget deficit."

The IMF also said that the country should focus on improving tax administration by improving transparency and redoubling efforts to tackle tax evasion. It noted that the country has the largest VAT compliance gap in the EU.

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