Lump tax may stay on in some fields

‘The first tranche is being assessed. It appears that revenues are even higher than expected, and its (lump tax) fate will be decided when experts will have exactly said what the impact is and to what extent it can be applied. I believe that in 2010, we should orient ourselves to the lump-sum tax being charged in those fields and activities that justify it and where tax dodging cannot be eliminated,' the PM said, according to whom the lump tax also had a beneficial effect, as it led to a reduction in the number of front companies. ‘There were many companies whose only reason for being was to engage in all sort of dubious businesses,' Boc also said. The minister for Small and Medium-sized Enterprises (SMEs), Constantin Nita, however said that the lump-sum tax led not only to more budget revenues but also to job cuts and increased unemployment spending, which makes him an advocate for the tax being scrapped.

As of May 1, companies pay a minimum yearly tax of between RON 2,200 (roughly EUR 500), if they post overall revenues of up to RON 52,000, and RON 43,000 (circa EUR 10,000) for total revenues of more than RON 129 M.

By mid July, Premier Emil Boc said that government will take a decision on the lump tax having looked into the impact the tax had, answering a proposal from the Social-Democrat Party (PSD), for the tax to be scrapped starting September 1. Also, PM Boc called on the National Tax Administration (ANAF) to come up with a detailed analysis on tax evasion, with the data to be discussed by an inter-ministerial committee next week. In Boc's view, Romania does not need to raise taxes, but collect them better. ‘We have received quite many signals that tax dodging is pervasive and some smart guys live off the law-abiding ones,' Boc concluded.