Analysts Warn Tax on Turnover Could Render 30% of Companies Insolvent

One out of three companies in Romania will be exposed to insolvency risks if the government replaces the 16% flat tax on profit with a tax on turnover, showed a study by Iancu Guda, president of the Romanian Association of banking analysts.

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“Around 60% of companies in Romania will be unable to cover the tax burden following a tax on turnover. In the short run, the measure would increase tax collections but could trigger a domino effect. Large companies would be affected at first, and then smaller companies, which have business relations with the larger ones,” Guda told MEDIAFAX.

He said the most affected sectors would be those with high turnover and low profit margins, such as distribution and retail.

Romania's social-democrat government plans to eliminate a 16% flat tax on corporate profit with a 1-3% tax on turnover as of January 1, 2018.

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