Romania VAT cut to 16% delayed

UPDATE 18th Dec 2019: The Romanian Budget and Finance Parliament has delayed a proposed cut in its standard VAT rate from 19% to 16%. The approving vote may still happen this year, but is unlikely to a get Presidential approval. Speculation is that the cut will go ahead in a year's time, 2021.

The Romanian Senate was considering cutting the country’s standard Value Added Tax rate from 19% to 16% on 1 January 2020. The reduced VAT rate would also be reduced from 9% to 5%.

A 1% VAT cut to 18% was last proposed for implementation at the start of 2019. However, the fiscal position prevented it going ahead.

Following the financial crisis, Romania was forced to raise its VAT rate from 19% to 24% in 2010. Over the past two years, it has reduced this down to 19% in three steps in 2016 and 2017. Romania has the EU’s largest VAT Gap, a shortfall between anticipated VAT collections and actual revenues. It plans to introduce a limited range of split VAT payments to help tackle this shortfall.