Individuals on low income will pay lower income tax

Individuals will pay a lower income tax as from January 1. This way, in 2007 the tax rate for individuals, including collective farms (farmers) and individual enterprisers was lowered from 8% (as in 2006) to 7% for a taxable income that does not exceed 16,200 lei per year. At the same time, a taxable income from 16,200 lei to 21,000 lei will be subject to a 10% tax bracket, compared to 13% in 2006. The upper tax bracket for individuals will make up 20%, applied to a taxable income above 21000 lei, as earlier. The amendments to the Fiscal Code made in 2006 also provide for an increase in the individual income tax relief, from 4,500 lei in 2006 to 5,400 lei in 2007. The tax relief offered to taxpayers for maintained persons increased from 840 to 1,140 lei. Also starting this year, the personal tax relief of 10,000 lei offered to a disabled person of I or II degree can be entirely transmitted to his/her husband or wife, if the disabled person is not employed. Last year, the tax relief could have been partially transmitted – only 4500 lei. A tax rate of 15% paid by the legal entities remained unchanged for 2007. As Minister of Finance Mihai Pop states, these legislative adjustments have been made to the advantage of citizens on low income. The respective norms came into force as of January 1, 2007, and have been operated as part of a bill including proposals to amend 71 laws, within the Programme of the Government Activity for 2005-2009 “Modernisation of the Country – People’s Welfare”, the Objectives of the Fiscal Policy and Management for a medium term (2007-2009), and in compliance with the provisions of the Fiscal Reform Concept, passed by the Parliament.