Although the New Fiscal Code is not yet effective, changes with regard to some of its regulations have already been made.
As Prime Minister Victor Ponta declared, the tax on dividends would fall from 16 to five percent in 2016, the VAT on water would go from 24 percent to nine percent, and, pre-university educational establishments would be counted as juridical persons which do not have to pay income tax.
Some changes, such as the one regarding lowering dividend taxes, which was programmed for January 2017, have come sooner than expected.
The lowering in dividend tax is seen(1) as a way to bring back some of the money which was flowing towards other countries before. This would be a positive and perhaps, quite overdue change for the better in Romania.
The Prime Minister also talked about how helpful these changes would be for small businesses. The financial criteria which decide when a juridical person can register as a small business would go from 65.000 EUR to 100.000 EUR, and be taxed at three percent if it has no employees, two percent for one employee and one percent for two or more employees. So it will be easier for people to have small businesses while at the same time the Government could thusly make sure that there are more people paying for social security by getting work contracts.
Income tax will be calculated at 16 percent while regulations regarding mandatory social contributions will go through some changes regarding people who can be excepted from paying them. Such exceptions would be made for natural persons who have insurance for illnesses or maternity on the territory of a state with which Romania has a relevant bilateral accord. Another such exception would be the correlating of Law 227/2015 regarding the Fiscal Code with Law 223/2015 regarding military pensions and state aid granted to the families of military personnel who died while serving their country. There also been several modifications to the local tax system which will add to the list of novel regulations.
The new Fiscal Code includes stipulations regarding the payment of mandatory social contributions, which will become obligatory even for those without an employment contract, a rule which is to be implemented starting 2017. As well, Authorized Private Persons (PFA) will have to pay these contributions too, raising the total taxes owed by these entities.
And so, the newly approved changes along with the general implementation of the New Fiscal Code, are meant to help citizens and businesses prosper financially. This, in turn would help increase economic growth leading to an overall higher standard of living for Romanians.