Romania’s government approved a decree on July 15, 2022, raising excise duties on tobacco and alcohol starting August 1, and increasing VAT on sugary drinks from January 1, 2023. This fiscal package aims to bolster public revenues and align national tax policies with European Union directives.
The adjustment to tobacco tax rates ensures Romania complies with EU regulations. The EU directive mandates that the overall excise duty on cigarettes must represent at least 60% of the weighted average retail selling price of cigarettes released for consumption. Prior to this decree, Romania’s tobacco and alcohol excise duties had remained unchanged since 2015.
Broad Fiscal Reforms Targeting Sugary Drinks and Gambling
Beyond tobacco and alcohol, the fiscal decree introduces changes across several sectors starting January 1, 2023. VAT on non-alcoholic beverages containing added sugar, sweeteners, or flavors will rise to 19%, up from the current 9%.
The government is also targeting the gambling sector, introducing tax rates of up to 25% on winnings and up to 40% on the revenues of gambling companies. Additionally, dividend taxes will rise from 5% to 8%.
| Tax Category | Previous Rate | New Rate | Effective Date |
|---|---|---|---|
| Tobacco & Alcohol Excise | Unchanged since 2015 | Increased (EU 60% rule) | August 1, 2022 |
| Sugary Drinks VAT | 9% | 19% | January 1, 2023 |
| Dividend Tax | 5% | 8% | January 1, 2023 |
| Micro-enterprise Profit Tax | 1% – 3% (on turnover) | 16% (on profit) | January 1, 2023 |
Corporate Tax Adjustments and Revenue Projections
Small businesses face tighter fiscal rules. Micro-enterprises with an annual turnover exceeding €500,000, as well as those with no employees, will pay a 16% profit tax starting in 2023, replacing the current 1% to 3% tax on revenue.
To modernize payment systems, companies in trade and services with a turnover exceeding €10,000 must accept debit, credit, or prepaid cards.
Official estimates project these measures will generate 1.195 billion lei (\$242 million) in 2022 and 10.57 billion lei in 2023. Total projected revenues are expected to reach 41 billion lei between 2024 and 2026. This revenue drive follows a budget deficit in the first five months of 2022, where government spending reached 200 billion lei against revenues of 179 billion lei.
