December 05, 2005

Press Release

  Regulations on the 16% flat tax on personal income and on corporate profit entered into force starting January 1st 2005

On December 29th 2004, the Government of Romania adopted an Emergency Ordinance on the introduction of the unique tax of 16% on personal income and on corporate profit, which entered into force starting with January 1st.
Under the new regulations the corporate tax was reduced from 25% to 16% creating a more attractive milieu for Romanian and foreign investments.
Also, according to the new regulations, for employees’ wages, at incomes of Lei 10 million, comparable with the medium wage on economy, the personal discount, at the value of the wage from the base function is greater than the total amount of the deductions granted according to the old system.
At an income of Lei 8 millions, the citizens will gain approximately Lei 220 000 monthly, which means Lei 2 640 000 per year. If there are supplementary persons under the care of the tax-payer, the base deduction will grow until Lei 5.5 millions per month if there are 3 persons under care. From Lei 10 millions up, the deductions decrease progressively.
In the case of an income of Lei 12 millions, the net supplementary gain in the wallet of each citizen having this wage is over Lei 500 000 each month, which means Lei 6 millions per year.
“We wish that in the next two years the Romanian economy will be strengthen and capitalize in such a way in order to face the competition when entering the European Union. This fiscal policy has as scope the stimulation of the Romanian investments and the attraction of foreign investments. The Government decided to do all it is necesary in order for Romania to consolidate its position in the competition with the countries in the region”, stated Prime Minister Tariceanu.
During a meeting with Prime Minister Călin Popescu Tăriceanu on Tuesday, January 4th the resident representative of the IMF in Romania, Graeme Justice showed that the introduction of a flat tax quota „is in line with a good fiscal policy and with the regional evolutions”.

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