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Jurnalul.ro Vechiul site Old site English Version How To Bring In Or Opt Out Of The Taxation System

How To Bring In Or Opt Out Of The Taxation System

12 Oct 2010   •   00:00

Replacing the current 16% flat tax with a proportional taxation system was long debated on, and the Social Democrat Party, or PSD, said it would implement it once it took office. The founder of the Marshall Turism tour operating company Ioan Antonescu, begs to differ on the merits of such a proposal.

He actually sent the Government his own proposal to maximize tax collection rates.
For one, Antonescu said the Ministry of Finance should send money to institutions and state-owned companies that cover only for the net salaries of their employees, and not the full amount, including the taxation on these salaries and the amounts due to the health care, pension or unemployment funds. Thus, the tax evasion some state-owned companies engage in would be shortcut, Antonescu said. And implementing the system should not come hard, as it was operated that way prior to 1989.

The second proposal Antonescu makes refers to managing the debts to state coffers incurred by privately owned businesses. He says the Ministry of Finance should make it mandatory to commercial banks not to release companies the money to pay salaries unless they provide proof in the form of bank orders, that they paid their dues to the state and health care and pension funds.

The PSD proposal for a proportionate taxation system says income under 1,000 lei should be taxed 0%; income between 1,001 and 2,000 should be taxed 15%, while income between 2,001 and 4,000 should be taxed 25%. Taxes for income over the 4,000 lei mark should range between 35% to 40%.

However, Antonescu believes that foreign banks and multinational companies operating in Romania would manage to dodge the new taxation system and keep their contribution to state coffers to a minimum.
The solution is to find a bank subsidiary somewhere in the world, where taxation is lower, and route the money via accounts based with that subsidiary.
About 26,000 Romanian citizens use this system to dodge taxation, Antonescu said.
Translated by AAP

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