Tax administration emerged as the most severe obstacle encountered by companies in Romania, according to company managers interviewed for the survey.
An estimated 18% of senior management’s time was spent on dealing with tax regulations, a 6 percentage points increase, compared to the level reported in the previous survey, and above the south-eastern Europe (SEE) average of 14.3%
Untaxed, undeclared activity amounts to more than 28% of national output, putting Romania second only to Bulgaria in the EU for the size of the shadow economy as a proportion of GDP. Romania nevertheless made some progress: it reduced the tax payment frequency from quarterly to twice a year and introduced an electronic system for filing and paying taxes.
“Corruption remained a serious problem in Romania, despite significant improvements in all corruption related BEEPS indicators since 2008-2009,” the survey shows.
Informal payments or gifts were expected or requested from 13% of firms applying for a construction-related permit, 5.4% of firms meeting with tax officials and 5.8% of the firms applying for an operating license – all at or below the SEE average, but above the average of fellow EU members in central Europe and the Baltic states (CEB). The firms no longer reported that such payments were expected or requested to obtain an import license, considering that 16.3% did in the previous survey.
Political stability increased after 2012, when the center- left Social Democratic Party won both municipal and general elections, obtaining a strong majority of seats in the parliament combined with a strong presence in local offices. However, the political environment was adversely affected by difficulties between the prime minister and former president Traian Basescu, which culminated in 2013 in the failed attempt to impeach the latter.
After the country joined the EU in 2007, the number of Romanians migrating abroad increased, especially among young people. In 2010, 3 million Romanians (14.8% of the population) were estimated to be working abroad. In the report, workforce skills were seen as less of a constraint, possibly due to the impact of the economic crisis in Italy and Spain, popular destinations for Romanians working abroad, according to the survey.
The Business Environment and Enterprise Performance Survey (BEEPS), conducted by the EBRD and the World Bank, aims to assess the quality of the business environment.
The fifth BEEPS report was conducted between 2013 and 2014, while the previous survey, published in 2010, was conducted between 2008 and 2009.