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February 25, 2021

UHY report: Romania, most competitive EU country based on profit tax

Romania has one of the lowest profit taxes among global economies, representing less than a fifth of the profit registered, according to a new report authored by UHY, the international accounting and fiscal consultancy network.

The Romanian profit tax, 16 percent calculated for a taxable profit of USD 1,000,000 for the fiscal year that concluded in 2015, is far lower than the global average of 27 percent and the European average of 25.3 percent. The average level among G7 states is even higher, reaching 32.3 percent.

The European average of the profit tax is 25.3 percent. Among Central and Eastern European states, Romania is the most attractive from this standpoint, followed by Poland and the Czech Republic with 19 percent and by Croatia with 20 percent.

UHY explains that this low profit tax can help countries create a competitive advantage for themselves and to generate growth, unblocking for reinvestment higher sums obtained as profit and thus deterring companies from transferring their investments abroad, as well as attracting foreign companies.

The United Arab Emirates register the lowest level of the profit tax among all countries taking part in the study – since it does not levy such a tax – followed by Ireland (12.5 percent).

The United States tops the rankings of the economies with the highest profit tax level, according to the report, levying a profit tax of 41.4 percent. Nevertheless, UHY emphasises the fact that this thing is eased by a variety of schemes and deductions that result in even lower taxes for many companies.

UHY points out that of the 31 countries that were included in the survey, most (74 percent) maintained the level of their profit tax in the last two years. Six (19 percent) of them lowered this level last year, while only two (Israel and India) opted for an increase.

Established in 1986 and based in London, UK, UHY is a network of independent accounting and consulting firms with offices in over 320 major business centres across more than 90 countries. The services and teams are tailored to suit the culture of each client including publicly listed corporations, large and medium-sized companies, privately owned businesses, not-for-profit and public organisations.

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