The World Bank has approved a EUR 70 million tax system modernization scheme for Romania, according to an executive board decision made on April 26. The overhaul of Romania’s tax administration (ANAF) will “increase effectiveness and efficiency in the collection of taxes and social contributions; increase tax compliance; and reduce the administrative burden on taxpayers to comply with their responsibilities under the tax laws.”

The World Banks deems the the modernization of Romania’s tax system as a priority and as being among the important reforms the country must implement. “NAFA [e.n. ANAF) has laid a solid foundation for the next generation of revenue administration reforms that will span the next five years,” said World Bank task team leader and senior public sector management specialist Bernard Myers.

It is hoped the new system will encourage investment in Romania and that the revised tax administration will both encourage voluntary compliance and help the authorities stop tax evasion more effectively. “NAFA has decided that the next reforms will focus on fighting tax evasion, reducing the administrative burden on taxpayers, and increasing collection efficiency and the project is contributing to these goals,” said Myers, who added that the new system will be “fair, taxpayer service-oriented, and effective in identifying tax evaders, and it will, as a result, reduce evasion.”

According to the World Bank, during the pre-crisis boom years, Romania’s authorities only made small advances in increasing the revenues collected as a percentage of GDP, from 27.2 to 29.0 percent between 2004 and 2007. Post crisis, all the ground made up was lost and in 2010, the figure had fallen back to 27.2 percent. The World bank also reports that Romania’s tax efficiency index is among the lowest in the EU: 54 percent and 61 percent for VAT and social contributions respectively.

Romania-Insider