Romanian PM: The reinvested profit will not be taxed starting October 1. The fixed tax will be reduced from January 1, 2010

„Starting October 1, the reinvested profit will not be taxed anymore”, Romanian PM Emil Boc announced several hour before the IMF delegation in Romania is due to present the results of the first negotiations with Romania. Boc spoke at the end of the PSD-PDL coalition session, adding that the fixed income will be reduced in certain departments named by the Ministry of Finance, come the new year. The minimum pension will increase by 2% also starting October 1.

These are the main statements PM Emil Boc made:

I empowered the minister of Finance and the other ministers taking part in the last negotiations with the IMF to take several decisions that would take into consideration the following:

1. supporting the economic activity and the business environment in order to keep the work places for the Romanian citizens and for economic development. That is why we’ll preserve the unique income tax of 16% and the same VAT level

2. starting with October 1, we will enforce the measure that prevents the reinvested profit to be taxed, a detail we constantly requested during the negotiations with the IMF and the European Commission

3. from a political point of view, the fixed duty will be reduced starting with January 1st 2010, for certain departments and specific activities, which will be named by the Ministry of Finance and by those working against fiscal evasion

4. we decided to continue the transparent VAT reimbursement as a means of supporting businesses

5. we decided to support financial resources for infrastructure in order to preserve Romanians’ jobs and to insure the development of the country; a the infrastructure for transports, education, health, environment, flats’ heating rehabilitation will receive special attention, alongside European projects, with a focus on local administration

On the social component

we ought to know that during crisis, maintaining Romanians’ work places is the no. 1 priority

we decided to institutionalise the standard cost as an objective element to decide any state apparatus restructuring

these standard cists need to be implemented throughout the entire Romanian economy

making the public spending transparent through electronic auctions

we decided to respect our promises to the retired: the minimum pension will increase by 2% from October 1

On the PDL-PSD coalition

this coalition is justifiable only if it does what it needs to do for Romanians to help them through this difficult time

this coalition has been constituted in order to bring reforms that nobody brought in 20 years

we proposed an accelerated calendar for adopting main norms

About taking responsibility

the Government will take responsibility on September 2nd for the unique income scheme, restructuring governmental agencies , educational laws and the law project regarding forbidding receiving both pension and a state income

if the coalition cannot adopt these laws, it cannot justify its existence

these laws are not to be adopted because somebody requests us, but they are essential for Romania

if we do not adopt them, we might face a -14% deficit

About sacking 150,000 people

nowhere in the intention letter for the IMF is there a figure addressing redundancies

these redundancies are made regarding cost standards and restructuring has efficiency in mind