In the coming weeks, the Romanian Government plans to finalize a series of fiscal tightening measures aimed at reducing the budget deficit.
Key components of the package include a 10% increase in fuel excise duties and a rise in the standard VAT rate from 19% to 21%, effective August 1. Additional measures under consideration include new taxes on banks, while the dividend tax is set to increase from 10% to 16% starting January 1, 2026. These changes are expected to put upward pressure on inflation, especially due to higher transport costs resulting from increased fuel prices.
At the same time, Prime Minister Ilie Bolojan has committed to improving fiscal discipline by streamlining public expenditures, reducing subsidies, enhancing transparency and efficiency in state-owned enterprises, and implementing salary caps where necessary.
The initial package will be presented to parliament early next week through a “responsibility assumption” procedure. It will restore a two-tier VAT system, replacing the current 5% and 19% rates with new rates of 11% and 21%. Essential goods and services—including medicines, water supply, sewage, irrigation water, books, firewood, thermal energy, and hospitality services—will continue to benefit from the reduced 11% VAT rate.
