Government Ordinance no. 16/2013, amending and updating the Law no. 571/2003 and governing certain fiscal-budgeting measures, published in the Official Gazette No. 490/2 August 2013

A series of changes were introduced concerning VAT, excise duties and personal income tax. Hereafter we present the most important ones.

VAT

VAT rate for certain bakery products

Starting with 1 September 2013, the VAT rate applicable for certain bakery products, being bread and similar products, flour, certain types of wheat and rye will be reduced from 24% to 9%.

Simplification rules

Starting with 1 September 2013, the reverse charge mechanism will be applied also for the supplies of electrical energy performed by a taxable person registered for VAT in Romania to a Romanian VAT registered taxable person acting as trader, as well as for the transfer of green certificates.

Excise duties

Starting with 1 September 2013:

- the excise duties on ethylic alcohol will be increased to EUR 1,000/hl;

- the applicability of non-harmonized excise duties will be expanded to products such as: jewellery from gold and/or platinum except wedding rings, clothing from natural fur, recreation boats, cars having equal or more than 3 000 cm3, certain hunting weapons and weapons for personal use.

Income tax

The provisions of the article according to which the employees could benefit from a deduction from the taxable salary income, derived on the primary position, with respect to the expenses incurred for saving purposes under a collective system for the real estate sector, in the limit of RON 300 per year have been repealed.

However, for the expenses incurred for these purposes during the period January 1st to August 5th, 2013, the provisions of the legislation in force at the time when the expenses have been incurred would apply; respectively these expenses would be deductible in the limit of RON 300.

For additional information, please contact:

Venkatesh Srinivasan, Partner – Head of Tax and Legal

Ernst & Young SRL and E. Platis, C. Bazilescu LLLP

15-17 Ion Mihalache Blvd.

Bucharest Tower Center Building, 22nd Floor

Sector 1, 011171, Bucharest, Romania

Tel: (40-21) 402 4000, Fax: (40-21) 310 7124

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