Romanian Govt Might Reduce Social Security Contributions From Employers - Sources

Romania's Government is considering lowering the total social security contribution rate from 44% to 41%, reducing the rate paid by the employer by three points, starting with the second half of the year, people close to the matter told MEDIAFAX on Monday.

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A future ruling coalition meeting will decide exactly when this change is to be implemented, they said.

Reducing social security contributions is part of a larger economic stimulus package, which also includes reducing the flat tax next year (from 16% to 14% or 12%) and introducing a credit card for small and medium enterprises.

The additional letter of intent agreed upon by the Government and the International Monetary Fund, after the evaluation mission in October-November 2010, says the two parties agreed to consider reducing labor taxation in 2011, if the economy recovers and creates sufficient "fiscal space."

The social security contribution rates paid by employers in Romania are 20.8% for normal working conditions, 25.8% for excellent conditions and 30.8% for special working conditions. They also pay 5.2% to the healthcare fund, 0.5% to the unemployment aid fund and 0.25% to the salary guarantee fund.

The individual social security contribution rate also includes a 3% contribution to the private pension system.

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