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  • 73% of CFOs are concerned about the effects of COVID-19 on their operations

    73% of CFOs are concerned about the effects of COVID-19 on their operations

    Nearly three-quarters (73%) of CFOs surveyed in all countries express great concern about the potential impact of the coronavirus on their business, with most (80%) expecting a decrease in revenue, according to PwC COVID-19 CFO Pulse, conducted among more than 800 CFOs in 21 countries.

    When assessing potential financial actions to help mitigate the effects of the coronavirus, most CFO are considering cost containment measures. Thus 77% considering implementing cost reduction, 65% deferring or cancelling planned investments and 48% changing company financing plans.

    Nearly half (45%) of CFOs say their company plans to take advantage of government support programmes offered in response to COVID-19. The most common types of support they are considering are tax payment deferral and extension of tax deadlines.

    In terms of workforce, CFOs in all countries expect a range of consequences for the employees: 42% of respondents expect to introduce furloughs in the coming month, and 28% anticipate layoffs.

    If the COVID-19 crisis were to end immediately, 56% of CFOs expect a return to ‘business as usual’ within three months.

    Other conclusions of the PwC COVID-19 CFO Pulse report

    • CFOs are most concerned about global recession (71%), along with the financial effects of the coronavirus on their company’s operations (70%), decrease in consumer confidence reducing consumption (39%), supply chain issues (31%) and effects on our workforce or reduction in productivity (30%).
    • Of those CFOs considering changes to their investment strategy, most (80%) plan to reduce general CapEx investments. Other potential reductions could come in operations (60%) and workforce (55%).
    • Relatively few CFOs indicate they will cut spending on digital transformation (21%) and cybersecurity or privacy (5%).
    • Only 9% view it as an isolated challenge not currently having a major impact on their business.
    • Relatively few CFOs named difficulties with funding (18%), insufficient information to make good decisions (15%) and cybersecurity (6% )among their top concerns related to the coronavirus.
    • CFOs in Germany, Denmark and Switzerland expressed relatively less concern about the pandemic’s potential impact on their business and are also more sure-footed about their organisation’s ability to bounce back. They also show less inclination to avail themselves of government support programmes.

    The survey was conducted on 14 April  among 824 CFOs in Armenia, Brazil, Colombia, the Czech Republic, Denmark, France, Germany, Greece, Ireland, Japan, Kazakhstan, Mexico, Middle East, Netherlands, Philippines, Portugal, Singapore, Sweden, Switzerland, Thailand and the US.

  • Bucharest Stock Exchange (BSE) lost 34% since the beginning of the year

    Bucharest Stock Exchange (BSE) lost 34% since the beginning of the year

    Bucharest Stock Exchange (BSE) lost from the start of the year, since the first news about Coronavirus, 34% (EUR 13,2 billion) from the market capitalization, according to ”The Valuation multiples in the context of Bucharest Stock Exchange and local M&A market” report of PwC Romania.

    Thus, the decrease since the beginning of this year exceeded the increase of 23.4% recorded in 2019 compared to 2018, which marked the best performance of the BSE since the financial crisis. In the last 8 years the average yield registered by the stock exchange indices has exceeded the government bonds yield.

    In 2019, BSE’s capitalization increased by 23.4% to EUR 37.8 billion, sustained by high dividend yields, local economic growth above the EU average, promotion to the emerging market status and a series of changes to the legislative provisions.

    In the context of COVID-19, BET, the main index of the stock exchange, fell by about 25% between 30 December 2019 and 30 March 2020, from a 35.1% increase recorded last year. The same decrease was registered by the BET-TR index, which includes the first 17 most traded shares, after an advance of 46.9% in 2019.

    In the period from 1 January 2012 to 30 March 2020, the median excess return of BSE indices exceeded Risk free rate by 4.8% for BET and 13.9% for BET-TR. As far as for the 5-year CDS (Credit Default Swap) evolution, including the cost against non-payment, it is noticed a significant increase of 30% between February and March amid the sanitary crisis driven by coronavirus.

    The main conclusions of the report for 2019

    • Romania had a market capitalization estimated at 17.9% of GDP in 2019, which is below the level observed in Hungary, Czech Republic and Bulgaria.
    • In 2019, the stock market indices hit the highest level in the last 10 years, with BET-TR dividend yield averaging 8% – still at a significant level.
    • The total market capitalization of the 79 analyzed listed companies (for which financial information was readily available) jumped by 33.4% in 2019 as compared to the previous year.
    • In 2019, no IPOs were concluded on the Bucharest Stock Exchange. Moreover, the number of companies listed on the main market fell from 87 in 2018 to only 83 in 2019 following the delisting process of Oltchim, Boromir Prod, Amonil Slobozia and Petrolexportimport.
    • There is a high concentration of listed issuers on BSE regulated segment, with top 5 listed companies accounting for 65% of the total market capitalization at the end of 2019
    • At the top level, companies are active in the Oil &Gas, Financial Services and Electricity sectors. Therefore, the degree of representation of the economic sectors on the local capital market is low in the absence of several industry leaders.
    • In 2019, the electricity sector registered the highest level of market capitalization.
    • The highest P/E multiple was reported in the Healthcare sector whilst the lowest were in the Industrial sector and the Financial services sector.
    • For the financial services and industrial sectors, the downward trend observed in the last years continued and the valuation multiples of the companies listed on the BSE have decreased significantly and are now at the minimum level of the last five years. The Healthcare sector is at the highest P/E ratio observed in the last five years.
    • During 2007 – 2019, the market capitalization for companies operating in Materials, Industrial and Healthcare sectors were least influenced by the economic cycles, whereas Consumer and Oil and Gas were the most affected. Over the same period of time, the smallest variance in the P/E of companies was observed within Oil & Gas.
  • Impact of COVID-19 on businesses: 37% interrupted their activity

    Impact of COVID-19 on businesses: 37% interrupted their activity

    37% of companies surveyed have fully or partially interrupted their operations after declaring the state of emergency due to COVID-19 pandemic and 20% have reduced their activity, according to the PwC Romania HR Barometer conducted by PwC Romania at the end of March.

    In this context, 27% say they will definitely apply for technical unemployment.

    The survey included a series of questions regarding the total or partial interruption of the activity, its reduction, the decrease of the turnover and the ability to pay wages. According to the answers:

    • 19% have stopped the activity altogether
    • 18% partially interrupted the activity
    • 19% haven’t interrupted their activity, estimate a decrease by 25% of the turnover and have the ability to pay salaries
    • 10% haven’t interrupted the activity, anticipate the reduction of the turnover by 25% and don’t have the ability to pay salaries
    • 20% reduced their activity, and business will be reduced by more than 25%
    • 14% don’t expect a decrease in turnover.

    In this context, work from home is an opportunity for companies that can implement it due to the specific nature of the activity. According to the study, 19% of companies implemented mandatory work from home for all employees.

    Companies whose activity specificity doesn’t allow them to work from home and whose businesses are affected take into account technical unemployment provisions, as follows:

    • 27% say they will definitely apply for technical unemployment
    • 18% still don’t know if they will apply because the technical unemployment provisions are unclear
    • 18% still don’t know if they will apply because they haven’t analyzed them
    • 5% indicate that they won’t apply them because the current provisions don’t correspond to their activity specificity.

    According to the survey, almost 30% of those surveyed anticipate that they will have the ability to pay wages in the next three months, while 42% didn’t estimate yet.

  • COVID-19 impact on business: 18% of companies estimate a decrease of revenues up to 20%

    COVID-19 impact on business: 18% of companies estimate a decrease of revenues up to 20%

    18% of the surveyed companies estimate a reduction up to 20% of the revenues as a result of COVID-19 pandemic impact on business, while the majority (65%) haven’t made assessments yet, according to the PwC Romania HR Barometer.

    Another 6% of the respondents estimated a decrease of revenues between 20-50%, 2% consider that the decrease will be between 50-80%, while 9% don’t expect a reduction.

    Of the economic sectors that expect a decrease of the incomes up to 20%, transports are detached with a large percentage of answers (75% of the respondents in this sector gave this answer). Also, 25% of the companies surveyed in the automotive industry (manufacturers and distributors) believe that the decrease in revenues will be up to 20%.

    The same estimate was made by 22% of responding companies in financial services, 21% of consumer goods (distribution, logistics) and 20% of energy.

    Measures to protect employees

    The study aims to find out what measures have been taken to protect employees against infection with COVID-19, as well as the period during which they will be applied.

    According to the answers, 89% of the study participants performed disinfection in the office, 85% limited the interactions, 58% instituted work from home only for those who can work remotely, 40% offered protective equipment, 25% implemented work at home for all employees, 13% decided on mandatory  work from home and 13% only for the employees who traveled to risk areas.

    Interaction-limiting measures

    Another question concerned the options considered for limiting interactions in the context of COVID-19.

    Respondents took the following measures: 81% canceled internal and external events; 79% limited foreign travel; 72% limited domestic travel; 55% limited internal and external events; 24% applied the work in turns to avoid crowding.

  • 74% of companies to increase the investments in technology to improve HR

    74% of companies to increase the investments in technology to improve HR

    Attracting top talent and keep them, developing everyone to reach their potential and improving people’s work experience, primarily by automating tasks, are the main concerns for HR leaders in 2020, according to the global survey PwC Human Resources Technology.

    To solve these challenges, 74% of the respondents intend to increase the investments in technology and 79% plan to use artificial intelligence for HR processes by 2022.

    Asked about what technologies they plan to use, HR leaders mentioned one or more areas of interest: 49% talent acquisition, 48% improved user experience for employees, 46% skills mapping/career path tools, 45% intelligent recruiting, 45% processes automation and 36% tailor learning journeys.

    ”The current generation of HR tech has a solution for every point in the employee journey and to monitor every dimension of work, bringing huge benefits. Though, in a true digital transformation, adoption of emerging technologies is just one part. The bigger goal is developing a workforce and culture open to innovation and change. Thus, the real challenge is the adoption of technologies by employees who must be supported in this endeavor with trainings and other incentives”, said Ionuț Sas, Partner, People and Organisation Leader PwC Romania.

    The survey shows that 82% of the companies say they struggle with adoption challenges when it comes to the technology in their human capital portfolio and they think about strategies of digital upskilling, incentives and gamification, to increase tech adoption rates.

    The global market of HR cloud solutions developed a lot in the last ten years, to a value of USD 148 billion. It’s a segment with many innovative start-ups that are promising to help companies keep up with smart, always-on and connected interactions employees and talent networks expect, according to the report.

    PwC’s Human Resources Technology Survey explores the effectiveness of technology investments from the views of 600 HR leaders on six continents.

  • Romanian M&A market increased by 4% year-on-year in 2019

    Romanian M&A market increased by 4% year-on-year in 2019

    Following a decline in 2018, the mergers and acquisitions market in Romania grew by 4% to a total value of EUR 5.2 billion in 2019, according to a study by the PwC Romania and D&B David and Baias integrated transactions team.

    Transactions decreased by 9.6% to EUR 5 billion in 2018

    In 2019, 215 transactions were completed, 26% more than in 2018, with an average value of EUR 24 million. Of those transactions, 14 were valued at over EUR 100 million each, with 16 valued at between EUR 40 and 100 million.

    “The M&A market remains interesting and at a high level, both in value and in terms of number of transactions. Although it still has to recover to reach the record of EUR 5.8 billion in 2007, we are optimistic about the development prospects, because several sectors are evolving towards consolidation, such as the medical, banking and IT&C sectors”, said Dinu Bumbăcea, Partner and Advisory Leader PwC Romania.

    According to the report, the most dynamic sectors in 2019 were IT&C, real estate and pharmaceutical / medical services. By 2020, energy is expected to be one of the most dynamic sectors, with two major transactions expected: the sale of Czech group CEZ assets and those of the Italian company Enel. The Healthcare & Pharma segment will also continue to consolidate, with large players searching for smaller and niche players.

  • The total number of cars in use in Europe will decline by 2025

    The total number of cars in use in Europe will decline by 2025

    The total number of cars in use (parc) in Europe is forecasted to grow with 1,4% by 2025, at 273 million, from 269 million cars this year, and to decline thereafter with 5,4% by 2030, due to increase of shared mobility & integrated mobility platforms (ex. Uber, Clever, Bolt) and alternative car ownership models, according to PwC Digital Auto Report.

    PwC report gives as example Germany, where the share of people who own a car has dropped from 43% in 2010 to 36% in 2018, while car fleets, whether owned by companies, rental companies or mobility platforms, increased over the same period from 57% to 64%. It is a trend that is expanding more and more globally and has already increased price pressure, due to the negotiating power of professional customers.

    According to the report, in Europe, 74 percent of consumers opt for the most convenient way of travelling, including using more than one mode of transport and 28 percent of European vehicle owners could imagine earning money from sharing their car via a peer-to-peer platform.

    Also, over 50 percent of consumers would be willing to pay up to USD 250 for a monthly subscription for unlimited rides within town. A similar percentage (47%) of European consumers would consider giving up their own car in favor of widely available and adequately priced autonomous robotaxi services.

    In Europe, the total value opportunity of alternative ownership will increase from USD 33 billion in 2018, to USD 191 billion in 2025 and USD 393 million in 2030. Globally, new mobility models are expected to account for 17 – 28% of vehicle-based mobility globally by 2030.

    Other conclusions of the report

    • The future of the automotive industry will be characterized by connectivity – increasing the number of 4G and 5G connected vehicles, electricity – increasing the share of electric vehicles, sharing – increasing the share of car-sharing and autonomy – autonomous cars.
    • The number will continue to increase in China, over 33% to 303 million cars by 2025 and at a slower pace in the US, by 2,2%.
    • It will be necessary to improve the transport, telecommunications and power infrastructure of electric cars.
    • Electric powertrains and automated features could increase the Bill of Material (BoM) by between 20 and 40 percent by 2030.
    • In this context, there will be a significant shift in producers and suppliers’ business models, which will make intense efforts to reduce the technological costs in the next decade.  
  • CEO pessimism over global growth in 2020 reaches record high

    CEO pessimism over global growth in 2020 reaches record high

    CEOs are showing record levels of pessimism over the 2020 global economy growth, according to PwC’s 23rd CEO Global Survey launched at the World Economic Forum Annual Meeting in Davos, Switzerland.

    The percentage of those predicting a slowdown in the global economy is the highest since we started asking this question in 2012. Thus, 53% are predicting a decline in the rate of economic growth in 2020, up from 29% in 2019 and just 5% in 2018. At the same time, the number of CEOs projecting a rise in the rate of economic growth dropped from 42% in 2019 to only 22% in 2020. 

    “Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising – even if the scale of the change in mood is,” said Bob Moritz, Chairman, of the PwC Network.

    CEO pessimism over global economic growth is particularly significant in North America, Western Europe and the Middle East, with 63%, 59% and 57% of CEOs from those regions predicting lower global growth in the year ahead. In contrast, the most optimistic are Central and Eastern Europe (CEE) CEOs, 43% of them predicting a decrease in the growth rate.

    CEOs are also not so positive about their own companies’ prospects for the year ahead, with only 27% of CEOs saying they are “very confident” in their own organisation’s growth over the next 12 months – the lowest level we have seen since 2009 and down from 35% last year. 

    While confidence levels are generally down across the world, there is a wide variation from country to country, with China and India showing the highest levels of confidence among major economies at 45% and 40% respectively, the US at 36%, Canada at 27%, the UK at 26%, Germany at 20%, France 18%, and Japan having the least optimistic CEOs with only 11% of  CEOs very confident of growing revenues in 2020.

    Analysing CEO forecasts since 2008, the correlation between CEO confidence in their 12-month revenue growth and the actual growth achieved by the global economy has been very close (see exhibit4 in notes). If the analysis continues to hold, global growth could slow to 2.4% in 2020 below many estimates including the 3.4% October growth prediction from the IMF.

    Top concerns in 2020: Excessive regulation, trade conflicts and uncertain economic growth

    In 2019 when asked about the top threats to their organisations’ growth prospects, uncertain economic growth ranked outside the top ten concerns for CEOs at number twelve. This year it has leapt to third place, just behind trade conflicts – another risk that has risen up the CEOs agenda – and the perennial over-regulation, which has again topped the table as the number one threat for CEOs. 

    Policing cyberspace

    Globally over two-thirds of CEOs believe that governments will introduce new legislation to regulate the content on both the internet and social media and to break up dominant tech companies. A majority of CEOs (51%) also predict that governments will increasingly compel the private sector to financially compensate individuals for the personal data that they collect. 

    The upskilling challenge

    While the shortage of key skills remains a top threat to growth for CEOs and they agree that retraining/upskilling is the best way to close the skills gap, they are not making much headway in tackling the problem with only 18% of CEOs saying they have made “significant progress” in establishing an upskilling programme.

    Climate change – challenge or chance?

    Although climate change does not appear in the top ten threats to CEOs’ growth prospects, CEOs are expressing a growing appreciation of the upside of taking action to reduce their carbon footprint. Compared to a decade ago, when we last asked this question, CEOs are now twice as likely to “strongly agree” that investing in climate change initiatives will boost reputational advantage (30% in 2020 compared with 16% in 2010) and 25% of CEOs today compared with 13% in 2010 see climate change initiatives leading to new product and service opportunities for their organisation. 

    PwC’s 23rd Global CEO Survey was conducted among almost 1,600 CEOs from 83 countries across the world.

  • PwC: Global economic growth in 2020, a modest rate of around 3.4%

    PwC: Global economic growth in 2020, a modest rate of around 3.4%

    Global economic growth in 2020 is expected to grow at a modest rate of around 3.4% compared to its long-term average of a 21st century average of 3.8% per year, according to new projections by PwC.

    PwC forecasts that the global economy will advance from inertia, as long as trade tensions continue to create challenges for global supply chains and further integration of the global economy.

    Nevertheless, PwC expects that services will remain a bright spot for global trade, with the total global value of service export forecast to hit a record $7 trillion in 2020.

    ”Globalisation has been a defining feature of the global economy since the 1970s. Yet the global volume of merchandise traded slowed down dramatically and even went into reverse in 2019. Coupled with the effective disbandment of the World Trade Organization’s (WTO) dispute settlement mechanism in December, we can expect more challenging times ahead for global trade”, Barret Kupelian, senior economist at PwC UK, says.

    PwC forecast for Romania

    “All the forecasts for Romania, including the most optimistic of 4.1% belonging to the government, indicate a slowdown of the economic growth for this year compared to the previous years, in line with the trend of the global economy. Therefore, a stable and predictable legislative framework, as well as public investments, especially in physical infrastructure could contribute to the economic activity. Unfortunately, the low level of budget revenue as a share of GDP and the rapid pace of increase in current state spending put pressure and limit the role of fiscal-budgetary policy in stimulating economic growth. In 2020 and even more in the coming years, there should be a consolidation of public finances by improving tax collection and recalibrating public spending to create a favorable investment climate”, Ionuț Simion, Country Managing Partner PwC Romania, says.

    Major economies will continue to grow in 2020

    In the main scenario, PwC expects all of the major economies to grow. US economic activity is likely to expand by around 2%, in line with its potential rate.

    The Eurozone is expected to grow at approximately half that rate (i.e. around 1%). Germany, and other economies that are sensitive to global trade flows, to become more reliant on household consumption as a source of growth instead of net exports and investment.

    In the emerging world, we expect the Chinese economy to expand by less than 6%. According to the IMF’s latest estimates, 2019 was the year when India overtook the UK and France to become the fifth largest economy in the world.

    This is an ongoing process with India likely on current trends to overtake Germany before 2025 and Japan before 2030 to become the world’s largest economy behind China and the US.

    More jobs across the board but not necessarily spread equitably

    PwC expect the G7 to continue to create jobs, to the tune of around 2 million. Four out of the five new jobs in the G7 will be created in the US, UK and Japan. As the pool of labour resources in the G7 gradually dries up, earnings will continue their upward trajectory. But in the absence of productivity improvements, corporate profit margins could be squeezed.

    Global population biggest it has ever been but also the greyest

    In 2020, the world’s population is expected to reach 7.7 billion, which is around a 10% increase compared to a decade ago. China, India and Sub-Saharan Africa are expected to drive around half of the world’s annual population increase. At the same time, the number of people above the age of 60 globally is expected to surpass the one billion mark.

    Further predictions for 2020

    • As a further sign of the increased levels of automation across most industries, we expect the operational stock of robots to exceed the 2.6 million mark in 2020.

    • More than half a billion people are expected to live in the 30 largest cities of the world. According to the UN, Tokyo is expected to be the largest city in the world in terms of population, followed by Delhi and Shanghai.

  • Half of job seekers are willing to trade a part of their salary for flexibility

    Half of job seekers are willing to trade a part of their salary for flexibility

    Job seekers are willing to trade an average of 11.7% of their salary for flexibility and more than a third of candidates said they’d be willing to take a pay cut for a chance to learn new skills, according to a PwC US survey ”The future of recruiting”.

    That figure rises to 12.4% among those working in in-demand fields like technology.

    ”Salary and benefits almost always come first for job seekers. Lately, there’s been a global tendency to give up a part of remuneration for a benefits package, such as opportunities for training and upskilling, inclusion and personal flexibility in when and where they work. Employees’ interest in upskilling programmes has increased recently as a result of the extremely rapid transformations generated by new technologies with a major impact, including on the workforce. Thus, many employees are aware that they must improve their digital skills to remain competitive in the labour market,” said Ionuț Sas, Partner, People & Organisation Leader, PwC România.

    An employer’s reputation and recruiting experience are also very important for candidates when accepting a job.

    According to the survey, 92% of candidates say they’ve experienced poor recruiting practices at some point in their career, with over 60% being unsatisfied that a recruiting process takes longer than a month or because the recruiters suddenly stopped communicating without any explanation. Nearly half (49%) of job seekers working in in-demand fields like technology, banks or energy say they’ve turned down an offer because of a bad experience during the hiring process, with 56% saying they’d discourage others from applying due to negative recruiting experiences.

    The main conclusion of the PwC US survey ”The future of recruiting”

    • Slightly over half (51%) would forgo higher salaries for more flexibility.
    • 37% of candidates said they’d be willing to take a pay cut for a chance to develop new skills.
    • The same percentage said they see upskilling opportunities as the most important factor in deciding on a new job, after salary and benefits.
    • 62% of job seekers said they’re more likely to apply for a job where a company is openly committed to improving diversity and inclusion in their workforce.
    • Candidates want positive, direct human interaction throughout the recruiting process and less use of automation technology.
    • However, 44% of candidates said they’re open to using automation and technology options for routine contact, and to get information during the recruiting process, and 65% of candidates said they would like organisations to have an application dashboard so they can see where they are in the process. 
    • 78% said they expect the recruiting process to be clear on how personal data is used.
  • Romanian companies are planning to increase headcount in 2020

    Romanian companies are planning to increase headcount in 2020

    Over half of the respondents in Romania (54%) plan to increase employee numbers by an average of 11% in 2020, according to PwC Romania’s HR Barometer.

    The IT&C sector has the highest demand for new employees, followed by industry, automotive and retail. According to the respondents, 91% of IT&C companies plan to increase the number of employees by an average of 20% next year. In industry and automotive, 71% want to hire 6.2% more people and 50% of retail companies need an additional 6.4%. Personnel increases were also mentioned by 40% of financial services companies and 30% of pharmaceutical companies.

    “Our estimates show that Romania needs another one million employees in the next five years to achieve an average economic growth of 3.5% annually. As we know, in recent years, the workforce has become more difficult to find, which risks limiting the potential for economic development. For this reason, the government and companies should be involved in education programmes to develop the employee skills, especially digital ones, increasingly demanded by employers as new technologies become widely adopted,” says Ionuț Simion, Country Managing Partner PwC Romania.

    According to the survey, almost all of the new positions created in 2019 were in the Digital & Social Media area, such as Chief IT Digital Solutions, Instructional Designer, Social Media Specialist, Digital & Multichannel Manager, Digital Manager, RPA Specialist and Online Manager. The survey respondents also indicated their belief that accounting, IT support, administrative, financial and business analysis departments would be most affected by automation.

    “The main challenges faced by human resources departments in 2020 will be staff fluctuations and low commitment, rising wage costs, the impact of digitalisation and workforce shortage. New technologies and automation mean new skills and positions, which is increasingly being reflected in Romanian employers’ organisational charts. For example, most of the new positions created in 2019 are in the Digital and Social Media area,” says Oana Munteanu, Senior Manager – People & Organisation, PwC Romania.

    Almost all of the HR Barometer respondents consider themselves prepared for the workforce shortages and wage cost challenges in attracting and increasing employee numbers in 2020.

    PwC Romania conducted the HR Barometer study on 65 companies in various sectors during October 2019.

  • PwC Paying Taxes 2020: Romania 32nd in global rankings

    PwC Paying Taxes 2020: Romania 32nd in global rankings

    Romania has climbed to 32nd in the PwC Paying Taxes 2020 global rankings. Romania was 49th in last year’s study, which is part of the World Bank’s annual Doing Business report.

    This year, Romania is ahead of other countries in Central and Eastern Europe, including the Czech Republic (53rd), Slovakia (55th), Hungary (56th), Poland (76th) and Bulgaria (97th). The region’s best performers were again the Baltic States of Estonia (12th), Latvia (16th) and Lithuania (18th).

    Romania’s improved position is due to an average company’s total tax and contribution rate reducing from 40% to 20%. According to the methodology used in the report, the total tax and contribution rate considers only the tax obligations of an average company / employer as a percentage of profit.

    “Romania’s leap up the global ranking resulted from a significant improvement in the total tax and contribution rate indicator. Transferring responsibility for social security contributions from employers to employees has artificially diminished the employer burden. Romania is the only country in the European Union that has shifted almost entirely social security contributions responsibility to employees, but, as we know, the employers ultimately pay. In practice, companies’ fiscal obligations remained similar”, said Daniel Anghel, Partner, Tax and Legal Services Leader of PwC Romania. 

    Romania’s other indicators are unchanged from last year. The total tax time remained at 163 hours a year, compared to 213 hours at the regional level. An average Romanian company makes 14 payments annually, similar to last year’s situation, compared to the regional average of 14.4 payments.

    “Many countries have used technology to make it substantially easier to pay taxes. Whether it is reporting and payment methods that make taxpayers’ lives easier, or improved monitoring and control making anti-fraud measures, digitising tax administrations contributes to better tax compliance and, implicitly, to improved tax collection. From that perspective we see that Romania hasn’t made any progress since last year. The authorities’ recent announcement regarding the SAF-T acquisition tender is a very important step towards digitising the tax administration”, explains Daniel Anghel.

    The global report highlights the significant advantages offered by tax administrations adopting new technologies. In both Brazil and Vietnam, the time needed to meet tax obligations was 23% lower in 2018 than in 2017. Other economies have benefitted from large reductions in the number of tax payments.

    At the regional level, Poland has fallen eight places since last year’s study, due to an increased number of tax reports. The Czech Republic has also slipped eight places, with Slovakia and Bulgaria dropping seven and five places, respectively. The news is better for Hungary, after climbing 30 places to 56th.

    Globally, the ease with which an average company can pay taxes has remained relatively stable across all four indicators: total time (234 hours), total payments (23.1), total tax and contributions rate (40.5%), and post-filing index (60.9 out of 100).

    About Paying Taxes 2020 study

    Paying Taxes 2020 compares business taxation in 190 economies. It helps governments and businesses to assess whether their tax systems are keeping pace with global change and learn from what others are doing. The report models business taxation in each economy using a medium-sized domestic company as a case study.

    The Paying Taxes study provides governments with an objective basis for like-for-like benchmarking of their tax systems and a platform for constructive discussions around tax reform across a broad range of issues.