Reduction of the Effective Corporate Tax Burden in Romania from 1992 to 2012 and Romania’s Current Ranking among the Central and Eastern European Member States

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.

Spengel, Christoph, Sebastian Lazar, Lisa Evers and Benedikt Zinn (2012), Reduction of the Effective Corporate Tax Burden in Romania from 1992 to 2012 and Romania’s Current Ranking among the Central and Eastern European Member States, Post-Communist Economies 24(4) , 477-502