Romania Embarks on Massive Tax Overhaul

June 30, 2017 Taxation in Romania

Tax overhaul in RomaniaBUCHAREST – Romania, one of Europes most corrupt countries, is taking steps to claw back tax revenues from businesses continually dodging their tax obligations.

On June 29th the government of Romania announced that it intends to overhaul the national tax system to support economic growth and tax collections.

Currently, businesses in Romania pay a flat-rate corporate tax of 16 percent on profits.

However, under the new proposal businesses would pay a turnover tax, as it is believed that the change would help boost tax collections from businesses which continually report losses.

The tax would be levied at a rate of 1 percent to 3 percent, based on the level of turnovers seen by the business, with the lowest tier applying only to micro-sized operations seeing less than EUR 500 000 per year.

The proposed turnover tax would apply from January 1st 2018.

Along with the turnover tax, the government hopes to introduce a new tax of at least 20 percent to be paid by any company which extracts natural gas in the country and sells it overseas.

The government would also take steps to fight the use of illegal labour and to prevent the formation of new companies by any individual who already has two or more insolvent businesses.

Romania has recently enjoyed its spot as the fastest growing economy in Europe, however, it is also often regarded as one of the most corrupt countries in Europe.