Romanian Finance Ministry Won’t Be Involved In Setting Local Taxes

Pogea said the Government has not yet made any decision related to tax value updates, and a solution would be found after talks with local authorities and specialized law firms.

Klaus Johannis, mayor of central Romanian city of Sibiu, said Thursday it would be inopportune to hike local taxes, adding that the Finance Ministry should focus on state finance, while local authorities should take care of local finance.

Local taxes are hiked once every three years depending on the evolution of inflation since the last hike, according to the Tax Code. The new taxes have to be approved by Government Decision until April 30 each year.

Daniel Marinescu, fiscal policies and local budgets manager within Romania’s Interior Ministry, said Wednesday that a hike depending on inflation would start from the levels set by Government Decision no. 1,514 of 2006.

Local councils may add a maximum 20% to the hiked value, Marinescu said.

Marinescu added the updated tax value will be applicable only as of January 1, 2010, not in 2009.

The Finance Ministry said last week the property tax, based on which individuals and companies pay their property taxes on lands and buildings, will be hiked by 24.3% after being kept unchanged in the last years.

The property tax for individuals is computed by applying a tax ratio of 0.1% on the tax value of the building, according to the Tax Code.

For legal entities, property taxes are computed by applying a tax ratio, which is set by the local council and may rank between 0.25% and 1.5%, on the property’s tax value.