A recent article published by Reuters newswire points out to a trend that has been catching in Romania: local company owners prefer to incorporate their business in neighboring Bulgaria, where the Government has implemented measures which help companies weather the crisis, rather than continuing to pay taxes in their home country.

This could trigger lower budget revenues during a period when the Romanian state is trying to increase the revenues to the budget using a variety of measures, among which taxation increases. Meanwhile, Bulgaria has chosen to stimulate economic activity.

"Tough budget measures to keep its international bailout on track have helped prompt thousands of Romanian companies to relocate to neighboring Bulgaria, where lower taxes and more stable regulations offer an easier place to do business," according to Reuters.

BUlgaria's income tax and corporate tax stays at 10 percent, while in Romania the flat tax is of 16 percent. The country also has a lower Value Added Tax than Romania's: 20 percent. Romania  increased its VAT from 19 to 24 percent this summer trying to meet the conditions for the International Monetary Fund (IMF) loan disbursement. "Sofia has also cut red tape and initial capital for setting up a company is now 2 levs ($1.39), compared with a previous 5,000 levs and 200 lei ($63.55) in Romania. It takes less than a week, almost half the time needed in Romania," the Reuters article goes on.
Read the entire article here.

romania-insider.com