The system’s gaps and inefficiencies counterbalance the competitive fiscal advantages in Romania


Bucharest, Romania – October 21, 2009 – The flat tax (16%) and the standard Value Added Tax (19%) are two of the main competitive advantages of the Romanian fiscal system in a regional context, but the frequency of legislative changes, insufficient regulations and the inefficiency of the administrative body destabilize the robust development of the Romanian business environment.

The conclusions were drawn by “Romanian Taxation – X-Ray of an Incomplete Reform”, the first CFO survey on Romanian taxation, issued by Deloitte Tax, the fiscal consultancy division of Deloitte Romania.

“From many points of view, the degree of fiscal sophistication in a country is proportional to the maturity level of that economy,” said Rodica Segarceanu, Partner Deloitte Tax and head of the International & Corporate Tax team. “In Romania, taxation has undergone several development stages, trying to answer the needs of the business environment. The companies we have talked to have acknowledged its progress and clearly pointed out a series of fiscal advantages. However, there are still worries regarding the interpretation, stability, applicability and transparency of procedures and regulations.”

Pieter Wessel, Partner Deloitte Tax and coordinator of the VAT team, highlights certain issues, based on his 22 years of experience on an international level.

“I joined the fiscal consultants’ team in Deloitte Romania six months ago from The Netherlands. During that time I got a clear overview of the Romanian reality and was able to compare the systems in both countries. I can say that the legislative process is close to EU-standards. However, the execution of these rules is not always within the EU-spirit. According to the World Bank, taxation rates, regulations and fiscal administration are key elements for the business environment during investment decision-making. Romania has developed its fiscal system over the past 20 years, but reform is still incomplete and this reflects in its attractiveness for foreign investors and the development of the local business environment”.





Main conclusions of the report

• The business environment stressed the need for authorities to develop a medium and long-term fiscal strategy and focus on reducing the frequency of legislative changes (34%).
• Lack of correlation between administrative procedures results in additional costs for companies and operational delays. Companies urge for the introduction of clear procedures in fiscal administration (22%).
• Most respondents indicated that legislation on various taxes is complicated and often causes contradictions between business cases.
• With the current social contributions level representing one of the most important costs for companies, introducing a ceiling in this specific area is an important measure for 23% of respondents.
• VAT is the most problematic aspect for companies, when dealing with authorities (35%).
• Relationship with authorities remains a controversial aspect, many times respondents indicating among issues the lack of flexibility and transparency, the insufficient professional training and non-cooperative attitude of fiscal inspectors, and the inefficiency of communication (authorities avoid assuming responsibility and do not issue solutions in more difficult cases raised by contributors).

Deloitte Tax took the survey during August 17 – September 20, 2009, by gathering opinions of Chief Financial Executives and heads of Tax departments in the most important companies in Romania. The input of 130 respondents, over 80% expressed during face-to-face interviews, has been centralized in a comprehensive 32-pages report. Participants represent the most important industries in Romania: Consumer Business, Financial Services, Manufacturing, Technology, Media and Telecommunications, Business Services, Life Sciences and Healthcare, Real Estate and Construction, Energy & Resources, Aviation and Transport.

The results of this tax survey are exclusively reflecting the opinion of participating companies, and Deloitte Tax S.R.L. has only assumed the objective role of presenting them in a centralized manner. The selected group of companies is not supposed to be a representative sample for the entire Romanian economy.



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