Romania ranks 151st out of 183 economies in the most recent PricewaterhouseCoopers and World Bank report Paying Taxes 2011. The country is down four places compared to last year.

“The ranking is strongly influenced by the high number of tax payments in Romania: no less than 113 payments during a year, out of which 84 for social contributions. There is no functional electronic payment system. The ranking in the second half of the top is not only due to the fiscal system in Romania, but also to the fiscal reforms made in other countries,” said Peter de Ruiter, head of the Fiscal and legal Consultancy department with PwC Romania.

To comply with the current fiscal legislation, 222 hours of work are needed a year, up from 202 hours last year. This is mainly due to new regulations on work contracts and on income taxes. However, progresses have also been recorded, such as the possibility to issue electronic bills, instead of paper-only bills, from October 2009, according to PwC.

“During 2010, the government has introduced several further fiscal measures aimed at helping to achieve budget deficit targets. These measures are expected to have an impact on the Paying Taxes indicators in the future. They include an increase in the VAT rate from 19 percent to 24 percent, along with the introduction of additional VAT compliance measures; an increase in other local taxes (e.g. vehicle tax, taxes on the issue of certificates, notices and authorisations for advertising); and the introduction of a new late-payment penalty system”, added Peter de Ruiter.

Seven European Union (EU) countries implemented tax reforms to make paying taxes easier in 2009/10: Bulgaria, Czech Republic, Hungary, Lithuania, Netherlands, Portugal and Slovenia.

The number of taxes levied on the company averages nine globally. The average in the EU is 10.9, ranging from 5 in Sweden to 17 in Hungary, Romania, and Italy.  While VAT stems from a common legal framework in the EU, the time required to comply with VAT legislation varies, due to different administrative practices used. VAT compliance takes 22 hours in Finland, for example, and 288 in Bulgaria.

editor@romania-insider.com