A while ago Horia asked about the implications of the tax reforms promised and already in place made by the Romanian government. As I've had quite a rough beginning of the year (I hardly can keep up with the news), I think it'd be better to direct you to Matei's lucid analysis on what had happened in Romania in the last 30 days or so from the economical perspective.
Briefly, the income tax was decreased from 25% to 16% and also the employees tax was changed from a three layer range (18-40) to a flat 16% one. Even though it looks like a good measure (and it is) overall the impact on the overall labour taxes is still high on the operational expenses and the monthly cash flow.
Also, for the microenterprises (revenues less than 100k euro and less than 9 employees) the (revenue) tax was increased from 1.5% to 3%. This has made some companies on the 100k euro limit consider switching from micro to the profit tax type of company.
More importantly the dividend tax was increased from 5% to 10% -- the weird thing is (and this is a major governmental hicup me thinks) that the 10% dividend tax is applicable also to the 2004 which doesn't really make sense and is a bit irritating for anybody involved in the business environment. This in spite of initial assurement from the PM himself that the tax would be applicable from the 2005 fiscal year on.
Anyways, in spite of this I am still optimistic and think that we're on the right way for laying a good foundation. On the other hand I read somewhere that Ionut Popescu (the Finance minister) has rough times in finding good people for his team - I also understood that he got pissed as there were some people who were suggested he should take aboard, perhaps that is the reason for him not being present this weekend at the meeting of his party (PNL) and the government members. Time will tell.
For more on the fiscal impact of the tax changes in Romania and for a good understanding of the big picture read the EIU's perspective. Also Cristi put together some links to useful resources.
