Small Romanian Vegetable, Fruit Producers To Pay Income Taxes

The farmers would have to pay the income tax in advance, according to the income bracket or the actual income method.

The current Tax Code exempts small producers who sell their products in markets or directly to end-consumers.

The Government now proposes that agricultural producers selling to collection companies, industrial producers or other entities required to keep accounting should withhold a tax of 2% of the value stipulated in the contract upon payment, to be adjusted at the end of the year. The withheld tax should be transferred to the budget by the 25th of the month following the payment of the income.

This change could significantly affect the price of agricultural products, as collectors, producers and other parts of the distribution chain will register 2% higher costs, unless the first producers lower their sale prices.

Agriculture Minister Valeriu Tabara told MEDIAFAX this proposal cannot be applied, because it would block internal production, adding that he was not consulted.

"I do not think this change can be applied, because one cannot determine exactly how much a person sells in one day or in one month. Such a tax is inappropriate for small farmers. How could they be taxed in advance, when they have to wait one year to earn the money? I do not believe it would raise food prices, but an unsuitable taxation system can block internal production. Farmers' profits are lower than in other fields and furthermore banks are hesitant to give out loans for agriculture," said the minister.

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