Fiscal stability is key to growth, KPMG analysts say

Although there has been some discussion about reducing VAT rate, a decrease is unlikely given the expected economic and budgetary context in 2013.

KPMG International has recently published the direct and indirect (VAT, etc) tax rates from more than 120 countries, including Romania, revealing a constant state of change as governments look to increase indirect rates to raise revenue but to decrease corporate tax rates to attract investment. “Romania increased the VAT rate from 19 to 24 pc in 2010, just below the highest tax rates – a few points less than Hungary’s 27 pc worldwide record. Romanian profit tax has been 16 pc since 2005, when the flat tax was first introduced, and there are no signs of potential hikes. Although there has been some discussion about reducing VAT rate, a decrease is unlikely given the expected economic and budgetary context in 2013,” comments Ramona Jurubita, Tax Partner, KPMG in Romania. Serban Toader, Senior Partner at KPMG in Romania comments: “Romania has a relatively low rate of corporate tax, which is attractive to investors. However, one of the continuing difficulties is that there are frequent changes to legislation on both direct and indirect taxation, often at very short notice. While I understand the challenges which the government faces in maintaining budget revenue in these straitened economic times, greater stability in tax legislation would be highly beneficial to business and the overall health of the economy. Businesses need to plan ahead, and have a clear idea about what taxes they will need to pay in the future. Unexpected changes with little warning can be very disruptive to business.” The Survey shows that the global indirect tax average increased in 2012 by 0.17 per cent to 15.50. Africa and Asia had the most significant increases, from 14.17 to 14.57 per cent and 11.84 to 12.24 per cent respectively.In 2012, Aruba had the smallest VAT, at 1.5 per cent, followed by a number of countries with a 5 per cent VAT/GST rate including Japan, Canada, Yemen and Nigeria. On the indirect tax side, Hungary (27 per cent), Iceland (25.5 per cent), Sweden, Denmark, Norway and Croatia (25 per cent) had the highest indirect tax rates, shows the annual KPMG International Corporate and Indirect Tax Rate Survey.“We expect the global indirect tax rate average to continue to rise in 2013 as more governments continue their path to economic recovery,” says Tim Gillis, KPMG’s Head of Global Indirect Tax Services. “In 2013 a number of countries’ VAT rates are expected to rise, including Finland, the Dominican Republic and Cyprus.”

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