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Reduction of the effective corporate tax burden in Romania 1992--2012 and Romania's current ranking among the Central and Eastern European EU member states

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  • Christoph Spengel
  • Sebastian Lazar
  • Lisa Evers
  • Benedikt Zinn

Abstract

This article traces Romania's development to a low-tax country among the member states of the European Union by analysing the major tax law changes in corporate taxation since 1992. We compute and compare the effective company tax burdens of a European model company at different points of time which constitute milestones in the development of corporate taxation in Romania. We find that the significant reduction of the corporate income tax rate from 45% in 1992 to 16% since 2005 has not been accompanied by a comprehensive broadening of the corporate income tax base as it has been in many longstanding member states of the EU and the OECD. Since 1992 the average company tax burden of the underlying model company has dropped by almost 65%. As a result, Romania holds second position among the group of Central and Eastern European EU member states.

Suggested Citation

  • Christoph Spengel & Sebastian Lazar & Lisa Evers & Benedikt Zinn, 2012. "Reduction of the effective corporate tax burden in Romania 1992--2012 and Romania's current ranking among the Central and Eastern European EU member states," Post-Communist Economies, Taylor & Francis Journals, vol. 24(4), pages 477-502, August.
    • Handle: RePEc:taf:pocoec:v:24:y:2012:i:4:p:477-502
    DOI: 10.1080/14631377.2012.729660
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    References listed on IDEAS

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    1. Katharina Finke & Jost H. Heckemeyer & Timo Reister & Christoph Spengel, 2013. "Impact of Tax-Rate Cut cum Base-Broadening Reforms on Heterogeneous Firms: Learning from the German Tax Reform of 2008," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(1), pages 72-114, March.
    2. Michael P Devereux, 2007. "Taxes in the EU New Member States and the Location of Capital and Profit," Working Papers 0703, Oxford University Centre for Business Taxation.
    3. European Commission, 2001. "Annex to Company Taxation in the Internal Market," Taxation Studies 0006, Directorate General Taxation and Customs Union, European Commission.
    4. European Commission, 2001. "Company Taxation in the Internal Market," Taxation Studies 0005, Directorate General Taxation and Customs Union, European Commission.
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    Cited by:

    1. Lazar Sebastian, 2015. "Tax Payments Determinants In Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 749-756, July.
    2. Apostol, Oana & Pop, Alina, 2019. "‘Paying taxes is losing money’: A qualitative study on institutional logics in the tax consultancy field in Romania," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 58(C), pages 1-23.

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