Benefits of the VAT reduction on food will be passed on directly to Romanian consumers, with prices decreasing by the same percentage as the drop in tax, according to the Romanian Sales Association (AMRCR).

"Consumers in Romania need the VAT reduction on food from 24 percent to 9 percent. Such a measure would help, in our opinion, to reduce tax evasion, to encourage local producers and will certainly stimulate consumption. Therefore, we welcome and support the government's intention to reduce VAT on food and hope that it will come into effect as soon as possible," said AMRCR VP Delia Nica.

According to AMRCR, all countries in Central and Eastern Europe apply reduced VAT levels on food. In Poland, the rate of VAT on food is 5 percent, in Bulgaria 9 percent and 8.5 percent in Slovenia.

Reducing the VAT on food and a possible differential income tax, in which the maximum tax rate does not exceed 16 percent, will be discussed in autumn with the international financial institutions, when the draft budget for the next year is made.

Ponta announced in July that the draft budget for next year will include a VAT of 9 percent for basic food products.

The Sales Association in Romania is a professional association that includes some of the biggest players on Romania's retail market. It was founded in 2003 and has as members Cora, Carrefour, Auchan, Kaufland, Real, Selgros, Metro Cash & Carry, Billa, Mega Image, Penny Market, Praktiker, Bricostore, Baumax, Dedeman, Hornbach, OBI and Mobexpert.

Ioana Toader, ioana.toader@romania-insider.com

photo source: sxc.hu