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Thousands of companies in Romania go to Bulgaria due to the austerity measures

The tough austerity measures, for the observance of financial agreement with the international financial institutions determined thousands of companies in Romania to move to Bulgaria, where the taxes are lower and the regulations are stable offering a business environment which is friendlier, Reuters says.

In Bulgaria, the profit tax is only 10% as compared to 16% in Romania and the VAT is less after the Romanian government increased VAT from 19% to 24%.The authorities in Bulgaria reduced bureaucracy and the initial capital for the setting up of a company is only two leva ( 1 euro) as compared to the previous level of 5,000 leva ( 2,500 euro) and 200 lei in Romania.At the same time, the necessary time to set up a company in Bulgaria is only one week, half of what is in Romania.

The Romanian business people consider that the speed with which amendments happen in the IMF agreement and the uncertainties connected to the future measures of austerity encouraged the people to transfer their business in Bulgaria. The Bulgarian authorities did not publish exact data, but according to the local press up to 2,500 Romanian companies established in this country, and other two companies set up in Ruse everyday. 'The Romania legislation and the fiscality change every day. How could be sure if you set up a company? I could face a tax of 40%' Bogdan Popescu of Bucharest, 23,says who wants to set up a television on-line station and record it in Bulgaria.

Although the only road connection between the two countries on a distance of 470 km is a bridge over the Danube, the companies could have the headquarters in Bulgaria and have their business in Romania, Reuters says. Both countries have a profound recession after the crisis of 2008 but Romania must apply tough reductions of expenditure and increase of taxes while Bulgaria who had big budgetary overplus can have low taxes.

Transition to market economy was supported by foreign investment in such countries as Poland, Hungary and the Czech Republic which were followed in the EU by Romania and Bulgaria in 2007.

Romanian and Bulgarian taxes are at a low level, as compared to most countries as well as the cost of the working force but the infrastructure continues to be unattractive for business. Bulgaria is the poorest country in the EU but contributions for social security are three third lower than in other states.

The VAT of 20% is at present lower than in Romania. 'If Greece and Romania must fight crisis through increase of taxes, it would be better for Bulgaria not to take such measure' Georgi Angelov, analyst at the Institute for Open Society in Sofia says.

The companies who moved to Bulgaria do not want to talk about this fact, not to draw the attention of the fiscal authorities in Romania, lawyers say. 'There is increased interest on the part of Romanian companies in connection to the costs for setting up business in Bulgaria' Desislava Grozeva, expert in marketing with the Romanian-Bulgarian Chamber of Commerce says.

She added that the VAT increase influences the decision of Romanians to set up their business in Bulgaria. The MP Varujan Pambuccian stated that there should be a reduction of bureaucracy to facilitate the activity of companies, and taxes should not be higher than in the neighbouring countries.

« It is more a matter of image. The companies do not come to invest in Romania, which needs investment' Nicolae Alexandru-Chidesciuc, head economist of ING Bank says.

The impact of the companies leaving for Bulgaria is small, as regards the lost income, almost 0.1%-0.2% maybe 0.3% out of GDP, he added.

Lawyer Denislav Marinov in Russe stated that at present he is helping four Romanian companies per month to set up, double of what happened before the VAT increase in Romania. The majority of the clients come from wholesale commerce, retail, construction materials, transport and agriculture.

Sursa: http://www.actmedia.eu

Tags: companies bulgaria romania romanian countries business taxes austerity measures ing euro

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