Fiscal implications of joining the European Union

Author:Patrick LEONARD, KPMG

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Keywords:Fiscal harmonization, taxation level, aquis comunitar, custom barriers, benefits

Abstract:
Considering that joining the European Union will happen in less than an year, both the entities from the economic environment, but also from outside them, will have to carefully analyze the fiscal implications of becoming member of the European Union, while the Government prepare the last stages of harmonizing the Romanian fiscal legislation in such a manner to be in accordance with the EU requirements. The European Union does not ask the member states a perfect alignment of their fiscal regimes, and, indeed, the suggestions made in the favor of a more centralized legislation confronted with very tough manifestations again this in some European countries from the EU as, for example, United Kingdom.\r\n\r\nIt is probable that the Romanian fiscal system will retain some distinctive elements for the near future and will continue to have many features in common with other economic systems in countries in transition with specific features. For example, the single taxation level of 16% for both individuals and legal persons has been introduced by the Romanian Government last year and reflects the characteristics specific to the Romanian economy.\r\nMany basic rules have already been established by the Romanian Government and the business environment in the view of joining the European Union. The consequences will be significant, mainly to the fact that belongs to a single European market, which will have a lot of benefits for the Romanian companies by the significant increase in the potential markets, but there are also challenges due to the competition force of the current member states of the European Union which they will have to face.

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