Since the 2003 budget has been endorsed by a law, next year will not see any major tax changes, Finance minister Mihai Tanasescu says. The significant modifications, either good or bad for the companies and the population are set to come in 2004, though.
A new restructuring of the excise system based on the types of fuels is due next year, in order to maintain the budget's revenues and discipline this market.
"We are working on an idea to include the road tax in excises. The excises on certain products will go up, while others will go down, so that we will not hurt the budget revenues," Mihai Tanasescu told Ziarul Financiar in an interview. The global 8% increase pace will be maintained next year, at least theoretically, in order to rally to the levels in the European Union. Excises have doubled in 2002.
At the same time the harmonisation of VAT and profit tax legislation will continue in 2003, as well, with a series of modifications and additions to the new laws that came into effect in 2002. The major changes, however, are set to come in 2004.
"We will have to push the profit tax down, and at the same time increase the dividend tax accordingly," Tanasescu said. The dividend tax is now 10%, while the profit tax reaches 25%.
"Once the privatisation is over, one has no other way but to tie the profit tax to the dividend tax. We will go for an overall taxation level of 40%, as applied in the European Union," the Finance minister said.
The Finance Ministry feels it is more lucrative to cut the profit tax and increase the dividend tax. The amounts collected from the profit tax might not go up, while those collected from the dividend tax will surely be higher.
Less than half of the 400,000 companies that submitted financial statements for the 2001 fiscal year actually made profit. Total turnover logged by these companies last year amounted to approximately $54bn. Profit accounts for nearly 7% of the total turnover, a survey of the National Council of Private Small and Medium-Sized Enterprises in Romania shows.
The year 2004 is set to come with a new relaxation of salary taxes, cut to 52% as of January 1, 2003. "We are planning to diminish the social security contribution (CAS) by another 5 to 7 percentage points early in 2004," Tanasescu says.
The authorities say the overall social security contribution - that is both the CAS paid by the employer and the CAS paid by the employee, will go down from 57% to 52%, but in a rather complicated manner. The fiscal relaxation promised for next year will not apply to everybody, as the maximum computational ceiling for the CAS will be raised to five gross monthly wages instead of the current three.
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