On the other hand, Bulgaria’s Tax Code is considered stable by virtually every business in the region, the study found.
The vast majority (92%) of companies present in Romania believe the current tax system does not allow them to build long-term business strategies, while the exact opposite is true in Bulgaria. Some 67% of Slovakian firms believe the local tax system allows long-term plans and sustained business development, a similar figure to that reported by respondents in the Czech Republic – 63%.
Tax rates are considered acceptable by every respondent in Bulgaria, by half the businesses in the Czech Republic and Slovakia, and by only 25% of the companies in Romania.
Social contributions are regarded as the main problem faced by employers in the wake of the changes to the Tax Code; every respondent expressed concern about the ambiguous manner in which the rates of contribution are to be set.
Although the study indicates that the local tax system and frequent legislative changes are a worry for companies operating in Romania, their representatives have the least knowledge about the Tax Code (75% do not know its provisions or recent amendments). In Slovakia, 57% of companies have superficial knowledge on the changes to fiscal legislation, while the situation is balanced in Bulgaria and the Czech Republic.
“In Romania, frequent changes of accounting and tax rules are a real problem to companies and, unfortunately, they discourage long-term planning. There are ways to overcome these obstacles, like capping, simplifying and consolidating social contribution (capping the tax base would lead to lower tax rates and, implicitly, higher voluntary conformation and collection). Furthermore, extending the rules on VAT to every taxpayer category can also encourage investors,” said Mihaela Virlan, managing director for Accace Romania and Bulgaria.
The study was carried out in August-September 2011 on medium-sized and large companies in the region.
The services provided by Accace include finance and accounting, tax and payroll consultancy. The company’s main clients are medium and large corporations operating in Central and Eastern Europe, like IBM, Shell, Allianz, Orsay, Scania, Olympus, Sharp and HBO.