Tax reform: Vasile Tofan announces a 50% increase in banking sector taxation
On the morning of August 5, Prime Minister Vasile Tofan outlined the main aspects of the updated tax reform. Later, during a show on Jurnal TV, he provided additional details. The Prime Minister announced that the tax rate on profits earned by banks and financial institutions will rise by 50%, from the current 12% to 18%.
“I believe this measure will be popular, but we shouldn’t celebrate just yet. We plan to increase taxes for banks and financial institutions by 50%. As someone who values analysis over populism, I have done the calculations and contemplated this decision. However, it comes with risks: for every lei withdrawn from the banks’ capital, their lending capacity could decrease by about six lei,” stated Vasile Tofan.
The implementation of this measure is scheduled for the fiscal year 2027, with authorities considering a potential moderation in lending rates.
During the government meeting on August 5, the Prime Minister noted that the budgetary-fiscal reform also aims to raise excise duties on products deemed harmful, provide tax relief for low-income individuals, and introduce a mechanism to ensure that the Value Added Tax (VAT) does not disproportionately impact household savings.
Additionally, the reform seeks to encourage the official declaration of wages by reducing the tax burden on labor and incentivizing employers to comply voluntarily.
“If we fine-tune this mechanism, we will motivate more employers to pay taxes in good faith, attract personnel to the labor force, and help diminish tax evasion,” explained Tofan.
The government is set to present a revised concept of the budget-fiscal reform on August 6, after the initial version faced criticism for its proposals related to the taxation of medicines, real estate transactions, and adjustments to incentives for home sales.
