PwC: Romania hasn't taken major steps to improve tax regime

Romania ranks 149 out of 183 economies analyzed in the World Bank and PwC’s Paying Taxes 2010 report from the point of view of the ease of paying taxes and contributions, slightly lower that in last year’s edition, when Romania ranked 146th.

Despite the economic downturn, government focus around the world has remained on tax reform, concludes a new report released today by the World Bank Group and PricewaterhouseCoopers. The report, Paying Taxes, finds that 45 economies made it easier to pay taxes, almost 25 percent more than in the previous year, but Romania hasn’t taken any steps forward and paying taxes in the local economy is no easier than a year ago.

“Romania performs better than the European average in what concern the number of hours necessary for the average company for the compliance with the fiscal requirements, 202 hours annually, compared to the European average of 232 hours. Unfortunately, this is counterbalanced by the high number of payments the average case study company has to perform annually, no less that 113, most of which are labour taxes, which rank Romania 182nd from that perspective out of 183 analyzed economies”, stated Peter de Ruiter (photo), Partner, Tax and Legal Services Leader, PricewaterhouseCoopers Romania.

By comparison, the global average number of payments necessary for the case study company is just 31 annually, which means that in Romania the average company makes almost four time as many payments during one year’s time. From the total tax rate perspective, meaning the companies’ total tax liability as a percentage of pre-tax profits, Romania improved its position compared to last year, this percentage decreasing from 48% to 44,6%, which is the exact EU average.

“We have to say that this year’s ranking of Romania is due not so much to the involutions on the local market, but to the fact that other economies took bolder steps to improve their fiscal regime”, concluded Peter de Ruiter, Tax and Legal Services Leader, PricewaterhouseCoopers Romania.

The report measures the ease of paying taxes across 183 economies by assessing the administrative burden for companies to comply with tax regulations, and also by calculating companies’ total tax liability as a percentage of pre-tax profits. In the past five years, the report has recorded 171 reforms affecting taxes in 104 economies worldwide. While 20 economies have reduced corporate income tax rates, 18 simplified the process of paying taxes. On average across all of the 183 economies covered in the report, the standard case study company measured has to make 31 tax payments and spend 286 hours on calculating and paying its taxes. The results show that corporate income tax is just one of the taxes with which business must comply. On average, the company pays 9.5 different taxes and corporate income tax accounts for only 12 percent of payments, 26 percent of the time to comply, and 38 percent of the tax cost.

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