The Government could propose an increase in added value tax rate this year by 1-2% from 19% to address the sagging tax revenues, according to PricewaterhouseCoopers (PwC).
“You would be surprised to see the results of a VAT increase by as little as 1%. The Government might consider this action in case it fails to meet the budget deficit targets agreed with the International Monetary Fund”, said Peter de Ruiter (photo), Partner, Tax and Legal Services Leader, PricewaterhouseCoopers Romania.
The impact over the budget “would be huge” and tax revenues would increase after only one month in place. But the short-term impact would be negative for the business community, as it would trigger a decline in consumption.
On the other hand, Gabriel Biris, managing partner at Biris Goran said that an increase in added value tax rate would not be a workable solution because it would inflate the cost of living.
“I don’t think that raising the VAT is the only solution. I hope the government would focus on tax base rather than burdening taxpayers even more”, said Biris.
Article comments "PwC: Government may consider raising VAT by 2% this year"
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