Thus, government emergency ordinance/January 6, 2017 will trigger this year a reduction of approximately RON955 million of the taxes paid by microenterprises with revenues below EUR500,000; nevertheless, the amount saved will be redirected to covering the additional expenses with salaries, which will increase by RON936 million following the minimum wage increase by 16%, from RON1,250 to RON1,450, as of February 1.
“The local business environment has been facing a sharp polarization from the moment of the impact of the financial crisis to the present, as big companies got rich and small companies grew poorer. Thus, the emergency ordinance recently published by the government, which amends (…) the income tax paid by microenterprises based on the number of employees, is beneficial for small companies, as it positively impacts nearly nine in ten active companies in Romania, which consolidate approximately 1.2 million employees. According to the impact study, microenterprises income taxes will decrease by approximately RON955 million in 2017 (most likely basic scenario), of which 60% in sectors such as retail and wholesale trade, constructions, agriculture, transports and other activities and services provided to companies. Nevertheless, I estimate that the positive fiscal impact on the companies would be fully offset by the higher expenses generated by salary hikes, in the most likely scenario in which microenterprises register a 25% share of salary expenses with employees paid with a minimum wage,” said Iancu Guda, COFACE Romania director.