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The Impact of Tax Rates on the Economic Performance of IT Companies: the Case of Moldova and Romania

Author

Listed:
  • Giorgio Dominese
  • Anastasiia Shapoval
  • Julia Pichugina
  • Sergey Yakubovskiy

Abstract

This article analyzes the IT sectors of Romania and Moldova when examining the impact of the tax policy of states on the economic performance of companies in the sector. The IT sector is a rather promising component for countries to develop; with the proper involvement of international companies and support for companies with local capital, the overall economic indicators in the country will improve. Theoretically, the systematic effect of tax changes for the sector on the economic performance indicators of IT companies was determined. Based on autoregression-built models, when performing the Granger and Wald tests, it was noted the impact of tax rates on the economic performance of companies in the IT sector. The central tax rates discussed in the article are the tax on company income, payroll tax, and social and medical insurance contributions. Changes in time for each tax were worked out to build the most reliable model of the interdependence between indicators. In addition, the general trends of improvement in the IT sectors of the countries are reflected, and a shared understanding of the impact of new changes in tax policy is noted. After introducing new preferential conditions or the reduction of standard taxes, there was an increase in the number of companies in the sector, investment in the sector, foreign investment, and turnover in the sector.

Suggested Citation

  • Giorgio Dominese & Anastasiia Shapoval & Julia Pichugina & Sergey Yakubovskiy, 2022. "The Impact of Tax Rates on the Economic Performance of IT Companies: the Case of Moldova and Romania," Journal Transition Studies Review, Transition Academia Press, vol. 29(2), pages 107-127.
    • Handle: RePEc:ase:jtsrta:v:29:y:2022:i:2:p:107-127:id:564
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