How high are taxes in Romania compared to the companies’ profits?

Romania’s Total Tax Rate, which measures the amount of taxes and contributions payable by businesses and expressed as a share of their profits, is 42%, below the CEE countries’ average rate (45%) and close to the global average of 40.8%, according to PwC’s Paying Taxes 2016 global ranking. The ranking, which measures the ease of paying taxes for a standard company, places Romania on the 55th place out of 189 economies in the world. Last year, Romania ranked 52nd in this report. “Romania’s position in the first third of the Paying Taxes ranking for a second year in a row is a positive outcome. By reducing the social security contributions (CAS) in the autumn of 2014, Romania has managed to decrease last year’s Total Tax Rate from 43.2% to 42%,” said Mihaela Mitroi, Tax and Legal Services Leader, PwC Romania. This year’s edition ranks Romania above countries like Bulgaria (88), the Czech Republic (122), the Slovak Republic (73), Poland (58), and Hungary (95), but still below Croatia (38), Slovenia (35), and the Baltic states (Estonia being ranked 30th, the Republic of Latvia 27th and Lithuania 49th). “This reinforces the necessity of maintaining a sustained rhythm of reforms, for which the coming into force of the new Tax Code will be of significant service,” added Mihaela Mitroi. When analyzing the time needed to comply with the tax legislation, Romania is among the leading CEE countries, with an average company spending 159 working hours a year for tax compliance, compared to a regional average of 218 hours and to a global average of 261 hours. Another sub-indicator used for the evaluation is the number of tax fillings and payments a company has to perform annually, where Romanian companies registered a number of 14 such payments, compared to a regional average of 9.5 payments and a global one of 25.6. “Even if Romania has made significant progress in this department along the recent years (from 39 payments in the 2014 edition of Paying Taxes to 14 payments in this year’s edition, an upgrade which generated a significant boost in the global ranking as well, going up from the 134th position to the 55th) mainly due to the implementation and recognition of the electronic tax filing and payment system, our number is still higher than the CEE countries average. The reason for this gap is that, along with the payments of standard central taxes, companies also have to make payments to the local budgets,” according to PwC. Paying taxes in Romania has become a lot easier, study shows editor@romania-insider.com