EY argues Romania should keep flat tax rate, improve tax collection

Romania "is not ready" to abandon the flat [income] tax rate, which "has served the country well" in the last 17 years, according to the head of tax and legal advisory at EY Romania, Alex Milcev.

The alternative - a progressive income tax system - is complicated and requires a complex IT system, he argued, Ziarul Financiarreported.

In exchange, he suggests that the advances in the informatization of the tax system driven by the COVID-19 crisis are a good opportunity for Romania to reduce the VAT Gap - or increase the VAT collection.

"The rise of informatization due to the pandemic is a real chance to increase collection without increasing taxes. It is the safest and simplest source of tax collection without the measure affecting the business environment for consumers," said Milcev.

On a more realistic note, the EY expert says that the Romanian tax authorities will probably choose a third way to increase the tax collection next year: more tax inspections.

"We anticipate that in 2021 taxpayers will get more frequent and applied tax inspections. 2021 will be the year of fiscal controls."

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