ROMANIA - Following efforts by the Romanian Meat Association (ARC) which has been calling on the country’s government to reduce the value-added tax (VAT) on meat, the recently released new draft of the country’s Tax Code states that the VAT on meat, fish, vegetables and fruit will be lowered 24 per cent to nine per cent starting in 2016.
The industry association says that the measure would allow to lower the prices of meat and processed meat products by at least 20 per cent. In addition to this, industry representatives say that the proposed meas-ure would facilitate the government’s efforts to tackle tax evasion, which is widely spread in the country’s meat sector, reports local daily Adevarul.
“Decreasing the VAT would also stimulate consumption, thus generat-ing an estimated €160 million of fresh revenue for the state budget,” the association said in a statement, adding that the proposed cut would also help combat unemployment.
Meanwhile, local meat industry representatives say that, due to the economic sanctions imposed by the European Union on Russia and the resulting halt in exports, they have been struggling to find new markets for their output.
To impact on policy-making, last year, the ARC launched a campaign to lobby for a lower VAT which included a petition intended for the country’s lawmakers and signed by more than 200,000 Romanians by the end of 2014.
The recent political developments suggest that the ARC’s lobbing ac-tivities have proven to be successful, much like the efforts of the coun-try’s baking industry several years ago. In 2013, the VAT on products made by the baking industry was also lowered from 24 per cent to 9 per cent in a bid to stimulate domestic consumption.
The latest move by the Romanian government is accompanied by the release of a positive forecast by the European Commission.
“Romania’s economy registered surprisingly strong growth in Q3 2014,” the Commission said in an analysis released on February 5, 2015. “As a result, annual growth is estimated to have reached 3 per cent in 2014.”
According to the analysis, “economic growth in Romania is forecast to stay above potential, at 2.7 per cent in 2015 and 2.9 per cent in 2016, powered by domestic demand and also supported by the gradual recovery expected in the global economy.”
Under the plan, the country’s standard VAT rate will be decreased to 20 per cent in 2016, and it will be further lowered to 18 per cent two years later, ac-cording to the draft Tax Code.
Set up in 1999 and based in the country’s capital Bucharest, the ARC says it represents the interests of some 50 member companies which hold an aggregate 60 per cent share of the Romanian meat industry’s total output.
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