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September 27, 2021

PwC Paying Taxes 2016: Romania has lowest total tax rate in CEE

* Total tax rate in Romania stands at 42 pc, in contrast to 122 pc in the Czech Republic, 95 pc in Hungary and 58 pc in Poland * Our country is 55th in PwC’s global Paying Taxes 2016 rankings that include 189 countries

Romania is 55th in the 189-nation Paying Taxes 2016 table compiled by PwC, a table that measures the ease with which a regular company pays taxes.

“The fact that Romania is in the top third part of the Paying Taxes rankings for the second consecutive year is a positive thing. Because of the reduction of the social security contribution rate in 2014, Romania has managed to lower the total tax rate year-on-year, from 43.2 to 42 per cent. So that, this year Romania has moved ahead of Bulgaria (88 per cent), Czech Republic (122 per cent), Slovakia (73 per cent), Poland (58 per cent) and Hungary (95 per cent), but is still behind Croatia (38 per cent), Slovenia (35 per cent) and the Baltic States (Estonia 30 per cent, Latvia 27 per cent and Lithuania 49 per cent). This underlines the need to continue, at a sustained pace, the reforms registered in recent years, and the coming into force of the new Fiscal Code will represent a significant impulse in this sense,” Mihaela Mitroi, Leader of PwC Romania’s Fiscal and Legal Consultancy Department, stated.

In what concerns the total tax rate, which measures the taxes and contributions paid by a company, as a share of its profit, the indicator stood at 42 per cent in Romania in this year’s edition, below the average level in Central and Eastern Europe (45 per cent) and close to the global average (40.8 per cent).

When it comes to the time required to comply, Romania is among the top performers in Central and Eastern Europe, with a time to comply of 159 hours per year, compared to a regional average of 218 hours and a global average of 261 hours.

In what concerns the number of taxes and fees, an average-size company in Romania has to make 14 tax payments annually, compared to a regional average of 9.5 payments and a global average of 25.6 payments.

Even though Romania has registered important progress in recent years when it comes to this indicator, considering the fact that the online statement and payment system has been recognized, dropping from a level of 39 payments in Paying Taxes 2014 to 14 payments in Paying Taxes 2016 and registering a significant climb in the global rankings (from 134th to 55th), we are still at the upper limit compared to other Central and Eastern European states. This is because apart from known fees and taxes, a company also owes taxes to the local budget.
Paying Taxes 2016 takes into account all taxes and mandatory contributions that an average-size company has to pay in a year. These taxes and contributions include the profit tax, social security contributions, labour tax, property tax, property transfer taxes, dividend tax, capital gains tax, financial transactions taxes, waste collection taxes, fleet taxes, road taxes and other small taxes and fees.

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