Romania plans to cut VAT on meat to 9%

06-Apr-2014 - Last updated on 07-Apr-2014 at 09:12 GMT

Romania hopes planned cut in VAT will stimulate sector

Romania’s government is planning to lower the VAT on meat and processed meat products from the current rate of 24% to 9%, according to Liviu Harbuz, deputy head of the agriculture commission at the Romanian parliament.

The reduced rate is to be implemented this August, according to Harbuz. Meanwhile, local meat processors are aiming to highlight their problems and push for the reduced VAT with a countrywide campaign.

According to the official, the Romanian government is drawing from its experience of reducing the VAT on products in the country’s baking industry. The tax rate was reduced from 24% to 9% in September 2013.

"This has worked very well for the baking industry," Harbuz told local daily, Jurnalul National. "We hope that it will have the same [result] for meat and processed meat products."

Meanwhile, local meat industry representatives say they aim to contribute to the ongoing discussion by pushing for a reduced VAT rate on their own.

"We hope to inform the public on the impact of this measure. We will even have billboards put in front of the Ministry of Agriculture, because we want to show the state of this industry," said Radu Timis, head of the Romanian Meat Association (ARC).

The campaign aims to point to the obstacles faced by the country’s meat industry both at national and European level and its impact on Romanian consumers, Timis said. It is scheduled to run until September 2014, allowing the association to influence the political debate during May’s European Parliament elections and ahead of the Romanian presidential vote, which is scheduled for November 2014, according to Timis.

Local industry observers say numerous Romanian meat industry players are on the verge of bankruptcy, and decreasing the VAT on meat could stimulate weakening consumption.

In addition to this, the country’s meat industry is plagued by tax evasion. This impacts 40% of Romanian meat sales representing €1.5bn, according to Harbuz.

Currently, the Romanian meat market is estimated to be worth about €3.2bn, according to figures obtained by Jurnalul National.