Romanians consume annually spirits worth EUR 700 million, but the state collects taxes and excise duties for only a quarter of the sales due to fiscal evasion, according to the Spirits Romania association.

Florin Radulescu, Spirits Romania president, said that 39% of the shelf price represents the excise duty, the VAT amount to 19%, whereas other taxes and financing costs amount to about 5%. Producers and distributors need to cover their costs from a 37% share, Radulescu explained.

“We could say that this is a state business, as 65% of the price goes to the state budget,” he added, cited by local Wall-street.ro.

The black market for spirits has increased significantly after the state decided to increase in 2013 the excise duty on pure alcohol by 40%, according to Spirits Romania.

The taxed production decreased last year by a third compared to 2012, whereas the amounts collected from the excise duty on ethyl alcohol were EUR 2 million lower despite the excise duty’s higher level.

editor@romania-insider.com