The government approved on Friday amendments to Romania’s Fiscal Code, changing the taxation regime for microenterprises and offering certain fiscal facilities for companies that are focusing on research & development (R&D) activities.

According to the Emergency Government Ordinance rolled out today, the firms that are focusing exclusively on innovation and R&D will be exempted from the payment of the profit tax.

The government has also decided to hike from EUR 100,000 to EUR 500,000 the turnover limit under which a firm is defined as a microenterprise. Furthermore, a 1 percent tax rate will be rolled out for microenterprises with one or more employees.

Florin Jianu, the minister of business environment, trade and entrepreneurship, said he hopes these measures will convince more young researchers to create companies in Romania, adding that the country could attract more foreign direct investments.

“The reduction of the tax rate from 2 percent to 1 percent and the change of the threshold from EUR 100,000 to EUR 500,000 impacts around 80 percent of existing microenterprises, representing an improvement of the fiscal framework and another step towards the reduction of red tape,” said Jianu, according to a statement.

Last year, the government exempted researchers in Romania from the income tax on their wages in a bid to stimulate the investments of companies doing heavy R&D.

Ovidiu Posirca