EBRD: Tax administration, corruption, political instability, top three business environment obstacles in Romania

Tax administration, corruption and political instability are the top three business environment obstacles identified by Romanian firms, according to a study of the European Bank for Reconstruction and Development (EBRD) released on Thursday.

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The EBRD and World Bank conducted the fifth round of their Business Environment and Enterprise Performance Survey (BEEPS) in 2013/2014, surveying top managers from over 15,500 companies in 29 EBRD countries who cited tax administration issues, corruption and a lack of skilled workers as continuing impediments to enterprise.

An estimated 18 per cent of senior management's time was spent on dealing with tax regulations, a 6 percentage points increase compared with BEEPS IV, and above the south-eastern Europe (SEE) average of 14.3 per cent. Untaxed, undeclared activity amounts to more than 28 per cent of national output, putting Romania second only to Bulgaria in the EU for the size of the shadow economy as a proportion of the Gross Domestic Product (GDP).

Still, the study says 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. Informal payments or gifts were expected or requested from 13 per cent of firms applying for a construction-related permit, 5.4 per cent of firms meeting with tax officials and 5.8 per cent of the firms applying for an operating licence ? all at or below the SEE average, but above the average of fellow EU members in central Europe and the Baltic states (CEB).