According to recent rumors in some specialized newspapers (Capital), the Romanian government is reportedly planning to introduce a new tax to replace the current taxes on profit and revenues (Microenterprise). The new tax, from what has been leaked, would have as a reference basis the “turnover figure” and should burden all kinds of taxpayers without distinctions related to the activity carried out, the tax status (small, medium or large taxpayer) or of the volume of business carried out (criterion used by the current Microenterprise regime). The advantages in introducing the turnover tax are related to the simplification of the tax settlement and the lower likelihood of litigation and dispute over the tax settlement.

Critical issues:

The turnover tax if it represents a simplification in the liquidation of the tax could be challenged by the European Union as having similar characteristics to VAT (a European matrix tax) and consequently incompatible with the Sixth Directive (precisely: with Article 33, no. 1 of Directive No. 77/388, as amended by Directive No. 91/680). This issue has already been addressed in the matter of IRAP (the Italian regional tax on productive activities) and ended positively (perhaps due to strong political pressure) for the Italian state. Thus, it will be appropriate for the Romanian government to take a closer look at evaluating the new tax before introducing it.