Romania To Cut Social Contributions, Keep Flat Tax, VAT Unchanged Until 2014

04.17.2011 By Ioana Tudor

The Romanian Government will reduce social security contributions by two percentage points in the second half of 2011 and will keep the flat tax and the value added tax unchanged in the next three years.

The Romanian Government will reduce social security contributions by two percentage points in the second half of 2011 and will keep the flat tax and the value added tax unchanged in the next three years.

The new measures are included in the draft fiscal-budgetary Strategy for 2012-2014, obtained by MEDIAFAX.

General consolidated budget revenues are expected to increase from 180.5 billion lei (EUR1=RON4.1021) estimated for this year, to RON203.6 billion in 2012, RON227.5 billion in 2013 and RON253 billion in 2014.

Consolidated budget expenses will increase from RON204.4 billion estimated in 2011 to RON221.6 billion in 2012, RON243.5 billion in 2013 and RON266.4 billion in 2014.

According to the strategy, in the 2012-2014 interval, revenues from income tax will stand at about 3.5% of the gross domestic product (RON21.1 billion - RON25.7 billion), revenues from the tax on profit are expected to reach 2.1%-2.3% of the GDP (RON13.6 billion - RON18.1 billion) compared to 2.3-1.9% in 2009-2011. Revenues from VAT will stand at 8.8-9.3% of the GDP (RON53 billion - RON67 billion).

Local budget revenues are likely to increase by 5 to 10 percentage points in 2013 and 2014.

Investment spending in 2012-2014 will stand at 7.7%-9.4% compared to 7.1%-6.5% in 2009-2011, reads the document.