Fiscal competitiveness issues in Romania

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1 Fiscal competitiveness issues in Romania Ionut Dumitru President of the Fiscal Council, Chief Economist Raiffeisen Bank* October 2014

2 World Bank Doing Business Report Ranking (out of 189 countries) Ease of Doing Business Starting a Business Dealing with Constructi on Permits Getting Electricity Registerin g Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency Rank Rank Rank Procedure s Time (days) Cost (% of income per capita) Rank Rank Rank Rank Rank Rank Rank Time (years) Cost (% of estate) Recovery rate (cents on the dollar) Rank United States Germany Poland Slovak Republic Hungary Bulgaria Romania Czech Republic Source: World Bank Doing Business Report

3 World Economic Forum World Competitiveness Report Ranking (out of 144 countries) WORST BEST Romania Bulgaria Czech Republic Hungary Poland Slovak Republic 7.05 Effect of taxation on incentives to work, 1-7 (best) Effect of taxation on incentives to invest, 1-7 (best) Country capacity to retain talent, 1-7 (best) Reliance on professional management, 1-7 (best) Cooperation in labor-employer relations, 1-7 (best) Quality of roads, 1-7 (best) Intensity of local competition, 1-7 (best) Prevalence of trade barriers, 1-7 (best) Wastefulness of government spending, 1-7 (best) Country capacity to attract talent, 1-7 (best) Favoritism in decisions of government officials, 1-7 (best) Primary education enrollment, net %* n/a 1.17 Ethical behavior of firms, 1-7 (best) Corporate ethics Internet access in schools, 1-7 (best) Fixed telephone lines/100 pop.* FDI and technology transfer, 1-7 (best) No. days to start a business* Strength of investor protection, 0 10 (best)* Domestic market size index, 1 7 (best)* Fixed broadband Internet subscriptions/100 pop.* No. procedures to start a business* Quality of math and science education, 1-7 (best) Int l Internet bandwidth, kb/s per user* Legal rights index, 0 10 (best)* Redundancy costs, weeks of salary* Source: The Global Competitiveness report, World Economic Forum,

4 World Bank Doing Business Report Paying taxes, ranking (out of 189 countries) Rank (number per year) Time (hours per year) Profit tax (%) Labor tax and s (%) Other taxes (%) rate (% Ireland Estonia Latvia Slovenia Lithuania United States Bulgaria Germany Slovak Republic Poland Czech Republic Hungary Kyrgyz Republic Sierra Leone Mozambique Yemen, Rep Belarus Romania Europe & Central Asia OECD high income Source: World Bank Doing Business Report

5 Tax or mandatory Bulgaria Romania Czech Republic Tax or mandatory Tax or mandatory Social security s 1 online filing 20.2 Social security s Social security s 1 online filing 24.3 Corporate income tax 1 online filing 4.9 Corporate income tax Health Insurance 1 online filing 10.2 Fees for municipal services (garbage collection fee) - Sofia Health insurance s 0 paid jointly 5.9 Corporate income tax 1 online filing 7.7 Stamp duty on property transfer Medical leave 0 paid jointly 1 Sickness insurance 0 paid jointly 2.6 Vignette Building tax 2 1 Property transfer tax Real estate tax on the land and building Unemployment 0 paid jointly 0.6 Unemployment 0 paid jointly 1.4 Vehicle tax Accident risk fund 0 paid jointly 0.4 Road tax 1 online filing 0.1 Fuel tax 1.. Guarantee fund 0 paid jointly 0.3 Real estate tax 1 0 Value added tax (VAT) 1 online filing.. Vehicle tax Value added tax (VAT) 1 online filing.. Final/one-off tax on certain expenses 1 online filing.. Firm tax 2 0 Fuel tax 1.. Totals: Urbanism tax 1 0 Totals: Land tax 2 0 Value added tax (VAT) 12.. Environmental taxes 1.. Fuel tax 1.. Stamp duty on contracts 0.. Totals: Tax or mandatory Hungary Poland Slovak Republic Tax or mandatory Tax or mandatory Social tax 1 online filing 30.5 Social security s 1 online filing 18.9 Social security s 1 online filing 39.6 Local business tax 1 online filing 5.9 Corporate income tax 1 online filing 14.1 Corporate income tax 1 7 Corporate income tax 1 online filing 5.8 National disabled fund 0 paid jointly 4.2 Tax on interest Rehabilitation 1 online filing 2.4 Labor fund 0 paid jointly 2.8 Property tax Training 0 paid jointly 1.7 Property tax Motor vehicle tax Special tax 1 online filing 1.4 Guaranteed employees' fund 0 paid jointly 0.1 Fuel tax 1.. Property tax 1 online filing 0.9 Transport tax Value added tax (VAT) 12.. R&D Tax 1 online filing 0.9 Fuel tax 1.. Totals: Land tax 1 online filing 0.2 Value added tax (VAT) 12.. Vehicle tax 1 online filing 0.2 Totals: Fuel tax 1.. Value added tax (VAT) 1 online filing.. Environmental tax 1.. Totals: Source: World Bank Doing Business Report

6 VAT rate (as of 2013)

7 Top personal income tax rates (as of 2013)

8 Top statutory tax rate on corporate income (as of 2013) BG CY IE LV LT RO SI CZ PL HU EE SE SK UK EU-27 FI DK NL AT EL LU DE ES IT PT BE MT FR Source: European Commission

9 Social security s (as of 2013) DK FI CY IE SE LU UK BG EE EU-27 PT LV ES IT SI AT DE PL LT RO EL CZ HU BE NL SK FR Source: European Commission

10 What employers must spend to pay each net euro to an employee Source: Molinari Economic Institute, The Tax Burden of Typical Workers in the EU 27, 2013

11 VAT gap (% of VAT liability) Sweden Malta Netherlands Denmark Ireland Slovenia Germany Austria Finland Bulgaria Poland Belgium Portugal Luxembourg Estonia France Spain Italy Czech Republic Hungary Lithuania Slovakia Greece Latvia Romania Sursa: Study to quantify and analyse the VAT Gap in the EU-27 Member States Final Report, TAXUD/2012/DE/316, European Commission, 2013

Aspecte ale competitivitatii economice a Romaniei

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