Tax wave

Companies that exceed a turnover of 50 million euros and banks will pay a tax of 1% on turnover provides for the draft law on some fiscal budgetary measures to ensure the financial sustainability of Romania in the long term posted, yesterday, in public transparency on the website of the Ministry of Finance.

Regarding this tax, companies with businesses over 50 million euros and banks will only pay it if it is higher than the 16% profit tax.

The government also introduced an exception regarding other credit institutions - Romanian legal entities and the Romanian branches of credit institutions - foreign legal entities, which, in addition to the profit tax, will also pay a tax of 1% on turnover.

The minimum tax/additional turnover tax is due from January 1, 2024, and for taxpayers who have opted for a financial year different from the calendar year, the provisions apply from the first day of the modified fiscal year that begins in 2024, after case.

Even small companies do not escape the new tax changes. According to the legislative proposal that Prime Minister Ciolacu wants to pass through the Parliament by assuming the responsibility of the Government, micro-enterprises with revenues of a maximum of 60,000 euros per year will pay a tax of 1%, and if the revenues exceed 60,000 euros the tax will be 3% .

As for the micro-enterprises that will pay a 3% tax, the respective rate will also be applied to companies that do not achieve revenues of more than 60,000 euros, but carry out activities of editing computer games, other software products, creating software to order (customer-oriented software), of other services regarding information technology, as well as micro-enterprises that offer accommodation facilities for holidays and short periods, those that deal with catering for various events, bars, professional societies with legal personality, established of lawyers, as well as companies that provide medical assistance.

The tax rates, mentioned above, applicable to the income of micro-enterprises will enter into force on January 1, 2024, the draft normative act also provides.

• Reduced fiscal facilities, value added tax - increased

Companies will also be impacted by the elimination of some tax facilities granted until now to employees in the IT, construction, agriculture and agri-food industries. The benefits are removed only for incomes exceeding 10,000 gross monthly lei, but all employees will have to pay health insurance contributions.

Regarding the taxation of the income of authorized natural persons (PFA), the cited project maintains the current ceiling system of 6-12-24 minimum wages, but introduces an additional ceiling of 60 minimum wages. Moreover, in order to reduce tax evasion, the Government wants that, from July 1, 2024, the tax rate for incomes made by natural persons, whose provenance cannot be proven, should be 70%.

The bill also provides for an increase in value added tax (VAT) from 5% to 9% for the delivery of social housing, the delivery of high quality food, the delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other systems of high-efficiency heating, and from 9% to 19% for the marketing of food and soft drinks containing added sugar. The government decided to maintain the 5% VAT rate for the purchase of books, newspapers, magazines, for the entrance fee to museums and cultural events, for the delivery of firewood and thermal energy.

At the same time, the Government decided to increase excise duties on cigarettes and alcohol. The draft normative act proposes to increase the level of excise duties for alcohol and alcoholic beverages, starting from January 1, 2024. The excise duty on cigarettes is currently 594.97 lei/1,000 cigarettes and will increase to 672.92 lei/1,000 cigarettes in 2024. Also, through the draft normative act, it is proposed to increase the excise duty level for the liquid containing nicotine and the tobacco contained in heated tobacco products on January 1, 2024.

• Taxation of large fortunes

The future normative act also provides for a new tax. Thus, individuals who own real estate more expensive than 500,000 euros and cars more expensive than 75,000 euros will pay a special tax of 0.3% on the difference between the taxable value and the real value that exceeds 500,000 euros - in the case of real estate - and on the difference between the purchase value and the value that exceeds 75,000 euros - in the case cars.

The tax is due for a period of 5 years starting from the fiscal year in which the handover-acceptance of the car takes place or for the fraction of years remaining until the completion of the 5-year period from this date for those in which the handover-acceptance of the car took place previously .

As for the holiday vouchers, their value will be increased to 1,600 lei, but the beneficiaries will pay for them a 10% contribution to the 10% health insurance and will only be granted to people with net incomes below 8,000 lei. According to the text of the law, holiday vouchers will be awarded between January 1, 2024 and December 31, 2026. The draft law also provides that holiday vouchers and meal tickets can also be awarded in cash.

• Measures to reduce budget expenses

The government also proposes measures to reduce the expenses of institutions and public authorities. In order to reduce the staff costs of the consolidated general budget for the year, it is proposed to: reduce by at least 25% the public dignity functions of state secretary, state councilor/undersecretary of state/vice president and public dignity functions assimilated to them; abolition of vacancies; abolishing the position of head of office; increasing the norms for the establishment of structures at the level of service/direction/general direction; reducing the share of public management positions in the total of positions at the main credit authorizing level from 12% to 8%; limiting management positions to a maximum of 10% for the other categories of budgetary personnel; the reduction of positions in the cabinets of dignitaries from the local administration, as well as those in the cabinets of the heads of the authorities/agencies/autonomous public institutions, which are under the coordination/authority/control of the Romanian Parliament; the granting of holiday vouchers and food allowance only for employees in the budget sector whose salary income is lower than 14,000 lei gross, simultaneously with their increase from 1,450 to 1,600 lei; limiting the amount of the increase of dangerous or harmful conditions for the staff in the budgetary sector to a maximum of 1,500 lei.

The draft normative act also proposes a series of measures that lead to the reduction of the operating expenses of public institutions and authorities, among which we list: expenditure norms for public institutions and authorities regardless of the financing method regarding the provision of cars and the consumption of fuels; regulations for expenses related to the purchase of mobile phones and monthly mobile phone subscriptions; the reorganization on July 1, 2024 of public institutions with legal personality under the coordination/subordination/authority of central/local public authorities.

At the same time, the draft law provides for the establishment of the national RO e-Sigil system, in order to ensure compliance with the traceability of road transport of goods on the territory of Romania. That system is based on the use of electronic devices and a computer application that will allow the competent authorities to determine the potential points of diversion of road transport of goods, regardless of whether they are in transit or have as their final destination an economic operator on the national territory .

The government estimates that all the above measures will bring a positive financial impact of almost 20 billion lei in 2024, while budget expenditures will be reduced by approximately 3.37 billion lei.