The Romanian government has decided on Tuesday to cut the value-added tax (VAT) for organic & traditional food products from 9 percent to 5 percent, a measure that could boost a sector that is still undeveloped in the eastern European country, and approved a mini-fiscal amnesty for low-income earners.
The government estimates that cutting VAT for organic and traditional food will have an impact on the budget of RON 836 million over the next four years, with VAT revenues falling by RON 106 million this year and by RON 260 million in 2022.
“It is proposed to reduce the VAT rate from 9 percent to 5 percent for the delivery of high-quality food products, namely mountainous, organic, traditional products authorized by the Ministry of Agriculture and Rural Development. The delivery of these foods will be accompanied by a copy of the recognition/certification issued by the competent authority, except for the delivery to the final consumer,” according to the initiators of the bill draft.
According to the current regulations, VAT rate for food products, including those labeled “organic” or “traditional”, is 9 percent.
Associations of organic and traditional food products in Romania have recently announced that they have signed an agreement to reduce the VAT rate to 5 percent.
In the same cabinet meeting, the government has approved a decree that exempts from payment of the health contribution the Romanians who earned less than 12 gross minimum wages per year between 2014 and 2017.
This exemption will also be applied to those who have already received tax decisions from the fiscal agency (ANAF) for health contributions for the period, according to PM Viorica Dăncila.
This is the second fiscal amnesty announced this year by the government.
In April, Finance minister Eugen Teodorovici said that the government may pass a fiscal amnesty measure in May, as part of a policy package for the private sector.