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Romania: Tax burden, among the smallest in Europe
20 March 2018, 5:02 PM

>>>The share of taxes and dues in Romania is at the world average and 13.3 points lower than the European average

By R. Constantin
On the basis of the economic data of the American secret services (CIA), UHY company is throwing on the Romanian news market a so-called study regardind the share of taxes in the GDP.
The first paragraph of the UHY communiqué, the Romanian subsidiary, casts a real disaster in our eyes.
There it is:
"Romania has a tax burden of 28.5% of Gross Domestic Product (GDP), 24% higher than the average rate for the major emerging BRIC economies (21.8%), shows research by UHY, the international accounting and consultancy network."
Why compare a "mosquito" with a "stallion" only UHY knows. Probably to impress the audience.
Further, the Romanian subsidiary's release goes back to normal and shows:
The Romanian government’s tax take (28.5%) is close to the global average (28.2%), much lower than in Germany (43.8%), Brazil (34.9% %), Japan (34.4%) or Poland (32.0%).
“Economies like Romania need to investigate and find more ways of lowering the tax burden for businesses. Otherwise, they will suffer from increasing competition from more dynamic emerging countries when trying to attract companies into Romania. It’s a fact: lower personal and business taxes can help economies spur growth and create incentives, particularly for investors and larger, more globally-focused businesses.” says Camelia Dobre - Managing Partner of UHY member firm UHY Audit CD S.r.l.
Generally, European economies dominate the top of UHY’s table of the highest taxes. On average, European economies record a tax burden of 43.3%: over 50 percent higher than the global average (28.2%) in the study.
To help lighten the tax burden, the Romanian government has already introduced a number of measures designed to encourage economic growth.
These include tax exemptions on reinvested profits and the ability to carry forward losses from the previous year to deduct from taxable profit in the current year.
Camelia Dobre continues: “In recent years the Romanian government has been proactive about encouraging business growth and development in the country, but more could be done. For example, in 2016 the government eliminated income tax on research, development and technology activities.”
“Reducing bureaucracy and investing in infrastructure would also complement efforts to increase the number of tax deductions available for businesses, especially for smaller businesses. That’s what I firmly believe. On the other hand it’s worth noting that starting this year Romania decided to tax the newly incorporated companies and companies that are below 1 million Euros yearly turnover as microenterprises.By this the fiscal policy holder cuts the alternative to choose the to be imposed by a profit tax for companies that have more than 45.000 lei (approximately 10.000 Euros) in share capital.” says Camelia Dobre.
“This is not an incentive for companies that decide to invest in Romania that are supposed to have profit in some time after the investment, so, till the investment will produce profit those companies will record a loss and those companies loose the right to compensate the loss.”
Globally, the Uhy study shows the levels of tax taken by national Governments are of growing interest, particularly for the EU at the moment with Brexit on the horizon, to secure Government funding in the short term and encourage growth in the long-term.
Recently, the European Commission suggested that EU countries may have to consider changing tax policies to help fill the €15 billion annual budget hole left by the UK’s Brexit. These could include proposals such as using a portion of corporate tax receipts from national treasuries for the EU’s common funds and programmes.
However, many European countries, including Germany and Portugal, with higher than average tax take are looking at ways to reduce the burden. For example, the German government (43.8% of GDP) has the goal of relieving the tax burden on SMEs to incentivise innovation.
The Romanian Government is in line with EU directives, just before of them. See the IT sector, for example.
But UYI does not want to know.
Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 320 major business centres across more than 95 countries.

Category: My files | : | Tags: tax, GDP, romania, Burden, Gross Domestic Product
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The Romanian Business Journal
Constantin Radut
Editor in Chief
031726 Bucharest, Romania

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