The progressive taxation with regard to the incomes of private individuals could be reintroduced next year by applying two income tax rates, of 12% and 18%, as the draft budgetary-fiscal policy for 2023 presented by the Ministry of Finance for public consultations provides, IPN reports.

The draft says a tax rate of 12% will be imposed on the annual taxable income that does not exceed 1 million lei, while a tax rate of 18% will be imposed on the annual taxable income that exceeds 1 million lei. The resident private individuals with an annual taxable income lower than 360,000 lei will further be able to benefit from personal exemption.

The Ministry of Finance estimates the budget impact following the reintroduction of this mechanism will come to 94.0 million lei.

The draft budgetary-fiscal policy for next year suggests establishing the standardized fiscal system of payments made by the employer to employees, including in the case of royalty, which is to be taxed in the same way as the salary is.

The concept for taxing legal entities’ incomes from entrepreneurial activities is to be reviewed so as not to tax the incomes that are not distributed in the form of dividends. The new concept envisions a fiscal vacation of three years on the payment of the tax on incomes from entrepreneurial activities for enterprises classed as micro, small and medium-sized, up to the moment the given income is distributed as dividends. In the period, these enterprises will pay an income tax rate of 0% on the taxable income that is not distributed as dividends and a rate of 6% of the income that is not distributed as dividends.