After the single quota, the Finance Ministry is now planning a new surprise for corporate taxpayers: the cut in the profit tax from 25% to 20% along with an increase in the dividend tax from 10% to 15%.
The Ministry officials would not say if this step is set for introduction in 2004 or 2005. Considering how often the Finance Ministry has been changing its mind since the introduction of the single tax quota, nothing can be ruled out.
"The standard profit tax level could be cut from 25% to 20%, with the decline in budgetary revenues planned to be covered by an increase in the dividend tax. We are currently levying a 5% tax on dividends for individuals and 10% for legal entities. The increase will be a reasonable one in order to stimulate the privatisation process and the purchase of shares," Maria Manolescu, Finance Ministry's state secretary in charge of the fiscal policy yesterday stated. She hinted the measure was scheduled for enforcement as of 2005, without ruling out a possible application as of early 2004, though.
The Exchequer representative argued the idea of resettling those taxes by mentioning the situation in Hungary, where the profit tax reaches 18% and the dividend tax is of 25%. Things are just the opposite in Romania: the standard tax levied on the companies' profit is 25%, while the tax on the dividends disbursed to shareholders is 5% for individuals and 10% for legal entities.
This situation has been monitored by the Finance Ministry for quite a while now. "Many companies pay salaries in form of dividends. We might push this tax up to at least 15%," Finance minister Mihai Tanasescu has recently said.
The Ministry's final target is to have the two tax quotas - the profit tax and the income tax "side by side".
Slovakia is the country that really levies a single quota set at 19% for both individuals and companies.
Tanasescu, however, admits that as far as the Finance Ministry is concerned, the scope of the single quota "needs to be expanded", as well.
The Finance minister promised taxes on dividends and interests would stay as they were until 2005 at least, specifying any change in this regard would be announced at least six months before the actual enforcement.
The possibility of new surprises - following the unification of the payroll tax quotas, was confirmed by Maria Manolescu yesterday.
She said yesterday that the "ideal condition" Romania should be in by the time it joined the EU was a 19% VAT and a profit and income tax of 20%. Which seems to point to a possible change in the single tax quota, now set at 23%.
"This system would encourage any taxpayer to pay their dues and would be the natural thing to do, given the situation in the countries neighbouring Romania," Manolescu added.
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