The VAT cut, which is likely to encourage consumption, should be complemented by fiscal checkups and measures to ease tax payment, which will help reduce tax evasion, Daniel Anghel, partner at PwC Romania, said.
Romania will lower the value added tax on bread to 9% on September 1 and the negative impact of the measure, estimated at about 100 million lei (EUR22.7 million), will be offset by increasing excise duties on alcohol and by introducing taxes on luxury goods.
The government expects to collect extra RON300 million following excise increases and the application of new taxes.
Finance Minister Daniel Chitoiu said that, by cutting the VAT on bread, the Government targets to reduce to half tax evasion in the bread industry, which is currently at about 80%.
Prime Minister Victor Ponta said International Monetary Fund experts approved lowering the VAT on bread although they still doubt the measure would reduce tax evasion in the bread industry. (EUR1=RON4.3907)