Romania's tax system increases hidden economy, scares off investors

Romania’s underground economy accounts for 28% of the country’s GDP, said Fiscal Council president Ionut Dumitru.

By comparison, the hidden economy in the European Union represents on average 18% of the GDP. Only Bulgaria has a higher rate compared to Romania, of about 31%.

The main factor which boosts the underground economy in Romania is the high burden of taxes and fees, and especially the taxes on labor, said Dumitru, reports local Agerpres.

The tax bureaucracy and the unfriendly tax administration system also contribute to the growth of the underground economy.

Romania’s unstable legislation represents a problem for 80% of the companies in Romania, said Mihai Daraban, president of the Chamber of Commerce and Industry of Romania. About 85% of the companies wish to interact with only one control institution, after the German model. Even when Romania has in theory a specific law, the companies don’t have the certainty that the law will be enforced, Daraban added. editor@romania-insider.com