July 5 (SeeNews) - Romania's finance ministry said it is proposing to increase VAT on sugary drinks, excise duties on tobacco products and profit tax for small firms as of January 1, 2023, aiming to boost public revenue.
VAT for non-alcoholic beverages with added sugar, sweeteners and flavors might increase to 19% from 9%, while VAT for HoReCa services might rise to 9% from 5%, according to a draft document posted on the finance ministry's website for public debate on Monday.
The ministry is also proposing to increase the excise duty on tobacco products and progressively tax gambling winnings with up to 40%.
Micro-enterprises with annual turnover higher than 500,000 euro ($522,176) might start paying 16% tax on profit, according to the draft. Currently, these companies are paying a profit tax of 1% to 3%.
Also, dividend tax might rise to 8% from 5%.
Another possible measure is that companies active in trade and services will be obliged to accept debit, credit or prepaid cards as a means of payment if their turnover is higher than 10,000 euro in leu equivalent.
Also, tax deductions for an employee with the minimum wage can reach up to 45% of the salary, if the person has 4 co-dependents. For an employee with a minimum wage, without dependents, the deduction might reach 20%.
Following public debate, all these fiscal measures will require positive assessment from the National Fiscal Council and the Economic and Social Council.
According to a footnote accompanying the draft document, the hikes are needed to ensure higher budgetary revenues. Also, the revision of the fiscal code is an objective included both in the ruling coalition's programme and in the country's National Resilience and Recovery Plan, the finance ministry explained. Consolidated budget revenue for the first five months of 2022 rose 21.5% year-on-year to 179 billion lei ($38 billion/ 36 billion euro), whereas spending increased by 15.2% to 200 billion lei, latest data from the ministry showed.
In June, the government approved a temporary moratorium on bank loan repayment by people and companies in financial distress as of July 1 as part of a 1.1 billion euro package of social and economic measures aimed at mitigating the impact of accelerating inflation. The government also approved a decree allowing students to take out state-guaranteed loans of up to 10,000 euro and families or couples to borrow up to 15,000 euro.
The government also decided that, alongside motor fuel retailers, it will cover 0.5 lei ($0.11/ 0.1 euro) of the price of a litre of fuel at the pump for three months starting July 1. Also, it suspended employment in public administration and state institutions starting July 1 until the end of the year, in order to cut costs and reduce the budget deficit.
(1 euro=4.9448 lei)