Romanian 2016 VAT rate cut in doubt

Mon 8th Jun 2015

Proposals to reduce the Romania VAT rate from 24% to 20% in 2016 now look in jeopardy as a result of political uncertainties.

The government of Victor Ponta had planned to return to the standard VAT rate following the 5% financial crisis rise to 24% in 2010. A gradual return to growth had indicated that the government budget could take the tax cut. Romania grew by over 4% in the first quarter of 2015.

However ongoing accusations of financial wrong-doing from the opposition and press has led to calls for the resignation of the government and new elections. This will put the necessary approval of Romania’s creditors in doubt for the Romanian VAT cut. The current bail out terms, supported by the EU and IMF, are due to expire in September

Romania recently cut VAT on food to 9%.

 



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