Expert: Independent IT contractors particularly hit by partial income taxation envisaged by RO Govt.

There is a risk of seeing many small, medium-sized independent IT companies in Romania not being able to survive in the next 12-18 months because contracts cannot be re-negotiated on short notice, Eugen Schwab, Vice President Central and Eastern Europe, Pierre Audoin Consultants (PAC), argued, quoted by Ziarul Financiar. He was speaking of the Romanian Government’s plan to levy a 10% income tax on IT experts’ gross revenues in excess to RON10,000 (EUR 2,000) per month.

He assumes that the companies would increase the gross wage in order to keep the net wage constant, resulting in profit margins lower by 25%-35% on average. The measure comes at a time when the technology industry is shrinking, Schwab argues.

He explains that multinational companies can absorb the higher taxation but might decide not to develop further in the country.

(Photo: Sarinya Pinngam/ Dreamstime)