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| Investments at a time of crisis |
| (2011-10-20) |
| Last updated: 2011-10-21 13:42 EET |
Around this time last year, foreign investors were proposing measures to be taken by Romanian authorities to revive the economy. Only a few of these were actually implemented, including making labor legislation more flexible, prioritizing major public investments, expanding governmental programs and facilitating loans for small and medium-sized enterprises.
Foreign businesspeople in Romania say this is still not enough. They are insistently calling for the improvement of the fiscal system, as Romania currently ranks below the European average as regards tax collection. Investors also recommend lowering social security contributions and the VAT from 24 back to 19 percent, as well as a zero tax on reinvested profit. Treasurer with the Foreign Investors Council, Daniel Anghel, explains:
Daniel Anghel: “Why are we asking for lowering the VAT back to 19 percent? For several reasons. First and foremost, the state budget should not rely primarily on tax increases. Additionally, the VAT was raised overnight, and the business community was caught unprepared. Last but not least, we believe the National Fiscal Administration Agency should be more efficient in collecting taxes. This is what should be done instead of raising taxes, which is not at all beneficial in such a difficult period. Encouraging consumption is another key element in bringing the VAT back to 19 percent, as the business environment desires.”
Other recommendations include making the legal system more responsible, thwarting tax evasion, liberalizing the energy market and improving European fund absorption. As always, investors point an accusing finger at high corruption levels. Steven van Groningen, President of the Foreign Investors Council, said:
Steven van Groningen: “How corrupt is the Romanian business environment? The answer is – too corrupt. It doesn’t matter that other countries might be even more corrupt; we have to completely eliminate corruption. To achieve that, we need sustained effort and zero tolerance for this phenomenon.”
A World Bank report shows that Romania has gone down seven places on the list of countries ranked according to the Ease of Doing Business Index. Romania is currently 72nd out of 183, ranking below countries like Belarus, Turkey and Bulgaria. The report, however, notes that Romanian authorities have simplified the corporate tax payment process by introducing a single form for social contributions and shortening insolvency procedures.
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