Romania Considers Reducing VAT On Construction Materials - Official

05.24.2011 By Bostan Radu

Romania's Government is considering reducing the VAT on construction materials, National Housing Agency (ANL) official Romeo Dragan said in a conference hosted by business daily Ziarul Financiar.

Dragan said an official position on the issue should be delivered soon.

Reducing the VAT on construction materials has been proposed several times by sector players.

President Traian Basescu last week said that raising the VAT rate to 24% from 19% was a "political error" that delayed Romania's emergence from recession by at least six months.

Jeffrey Franks, head of the International Monetary Fund mission, said two weeks ago that Romania might be able to reduce the VAT and other taxes some time in the next 5-10 years, only after it improves its fiscal collection and administration.

According to the data of the Romanian Construction Entrepreneurs Association, the local construction market shrunk 17% last year, to EUR9.7 billion, and this year the market will be worth EUR9.5-10 billion at best, before rising again in 2012.

Consultancy firm PricewaterhouseCoopers estimates the market will grow by $22 billion over the next ten years.