Romania has a 29 percent of GDP fiscal burden, which is 24 percent higher than the average in BRIC major emerging economies (21.8 percent), according to a study by UHY, the international network of accounting and fiscal consulting companies.
According to the study, the taxes imposed by the Romanian government are higher than the global average (28.2 percent).
Camelia Dobre, managing partner at UHY Audit CD, said: “Economies such as Romania should research and identify more ways to reduce the fiscal burden for companies. If they don’t, they will be affected by the more intense competition of more dynamic emerging companies when it comes to attracting foreign companies. It is proven that the decrease in taxes for individuals and companies could help economies encourage growth and create stimuli, especially for investors and larger companies with a globally-oriented activity.”
UHY analysed 34 countries across the world and calculated the percentage of GDP collected by the governments of those countries in taxes. Romania came 17th in the study and Denmark was in first place, with 53.5 percent of GDP collected through taxes.
The United States collects taxes amounting to 22 percent of GDP, while Ireland is the only country in the Eurozone included in the country where the taxes are below the global average.
In general, European economies dominate the top rankings, with the highest tax levels. On average, they have a fiscal burden of 43 percent.
Emerging countries generally had lower taxes imposed by governments, including a number of states from the ASEAN commercial bloc (The Association of Southeast Asian Nations), such as Malaysia and the Philippines.
In order to reduce the fiscal burden, the Romanian government has already introduced a series of measures to encourage economic growth. These include tax relief for reinvested profits and the possibility to report losses from the previous year for deductions from the taxable profit of the current year.
Camelia Dobre says that in the last years, the government has been proactive in encouraging growth and development of the domestic business environment, but that more efforts are needed: “Reducing bureaucracy and investing in infrastructure would contribute to the efforts of increasing the number of available fiscal deductions for companies, especially for small businesses.”
At a global level, the UHY study shows that the tax levels collected by national governments are of special interest, especially for the EU in the context of an imminent Brexit, to ensure short-term financing and to encourage long-term growth.
Recently, the European Commission suggested that EU countries might change fiscal policy in order to complete the annual budgetary deficit of EUR 15 billion which would be generated by Brexit.
However, many European countries such as Germany and Portugal, where taxes are higher than average, are examining ways to reduce the fiscal burden.