According to the Finance Ministry, scrapping the income tax on dividends actually means avoiding double taxation, for both companies and shareholders, and is expected to improve corporate governance.
The Finance Ministry expects the elimination of the income tax on dividends to reduce revenue collections to the state budget by RON1.86 billion in 2016, but estimates revenue collections from the value added tax, social security contributions and salary income will increase by RON1 billion, which translates into a net loss of RON860 million during the first year.
The Tax Code draft was approved Wednesday by the government and will be put up for public debate before submitting it to the Parliament for approval.