Flat tax boosts average Romanian salaries

March 10, 2005 Romania's flat tax rate of 16% on personal income and corporate profits, which went into effect on January 1, 2005, has proved to have a positive effect on Romanian salaries, which increased by 5.2% in the January 2005 in comparison to December 2004. The effect is even larger when compared to January 2004, with net wages increasing by 25.3% and gross wages increasing by 18.8%.

In January 2005, the gross (pre-tax) average monthly salary was 9,514,658 lei, while the net (after-tax) average monthly salary was 7,233,298, which is equal to roughly 200 euro or US$270.

Romania's flat tax system is one of the most liberal fiscal policies in Europe and was introduced in order to boost spending power and salaries, encourage foreign investment and greater consumer spending.