The Romanian Parliament yesterday agreed the standard VAT rate would be reduced from 24% to 20% on 1 January 2016. The rate would be reduced again to 19% in January 2017.
The Government plan to cut VAT rate 19% in 2016 but IMF and EU was opposed to this decision which oversaw the country’s bailout during the financial crisis. As a result, Romania decides to two stage cut. The reduce VAT will increase the fiscal deficit to 2% in 2016 compared to the forecast 2015 figure of 1.8% – although this may prove optimistic.
