Romania

Romania VAT cut timeline

Romania confirm VAT cut timeline

There has been lots of changes with regards to how much the VAT cut would be for Romania and when the implementation would take place, suggested cuts have switched between 4% and 5% over the last year with debates seen for both cuts. However within the last few weeks the Romanian Government has announced that in 2016 the VAT rate will drop by 4% to 20% and then in 2017 it will fall a further 1% to 19%. The parties agreed on this after concerns were raised over the viability of such a big VAT cut, and it was felt best to lower it in stages after the IMF was opposed to a one stage 5% cut.

See all previous eBiz Answers posts:

Romanias potential new reduced VAT rate and the success of the foos VAT rate drops.

Romanias confirms 5% VAT rate cut

Romania to cut VAT on food to 9%

Romanian VAT decrease to 20%

Romania to cut VAT rate

Having raised its VAT to 24%, from 19%, in 2010, making it the 5th highest in the EU, Romania has now committed to bringing back a lower tax rate and are planning to lower their tax rate to 20% in 2016, with a potential of a further 2% decrease to 18% in 2018 if it’s financially viable. Additionally there would be a drop from 24% to 9% for meat, fish, fruit, vegetables and other basic foodstuffs. Whilst this would result in over €2.5b budget impact, it is hoped that the lower rate will help to increase the compliance levels which saw a 3% decrease after the VAT increase was implemented in 2010.