A study comparing the corporate income tax revenues in Romania and those of other EU-27 member states

1. CORPORATE
INCOME TAX
D51B
MÁRTON ZSOLT

2. = a tax imposed on the
incomes of companies and
corporations

3. Annual tax on all profits made in the country
Resident companies pay tax on their Romanian
and worldwide income
Non-resident companies pay tax only on their
income sourced in Romania
Paid quarterly or annually
CORPORATE TAX IN ROMANIA

4. CORPORATE TAX RATES IN THE EU-27
0%
5%
10%
15%
20%
25%
30%
35%
40%
BE BG CZ DK DE EE IE GR ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK

5. LOW TAX RATE?
16% - nominal tax rate (below EU average)
But, other contribution rates in Romania are
high even by EU-15 standards
Therefore, effective corporate tax rate tends to
be higher

6. ABSOLUTE
VALUES
IN MILLIONS OF EUROS, FOR 2000-2010

7. shows the amounts of
corporate tax revenue earned
by each country

8. CORPORATE INCOME TAX REVENUES FOR EU-15
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
IE DE BE DK GR FR IT LU NL AT PT SE UK
EU-15 avg.
EU-27 avg.

9. CORPORATE INCOME TAX REVENUE FOR NMS-12
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
EE PL BG CZ CY LV LT MT RO SI SK
All new member states are below the EU-27
average, regardless of their size

10. STANDARD DEVIATION OF ABSOLUTE VALUES
0
5000
10000
15000
20000
25000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
EU-27 stdev EU-15-stdev
Financial crisis
Dot-com
bubble burst
Disparities between the member states have
decreased after the onset of the financial crisis
However, this trend has quickly reversed

11. STANDARD DEVIATION OF ABSOLUTE VALUES
0
500
1000
1500
2000
2500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
NMS-…
Financial crisis

12. EVOLUTION OF AVERAGE D51B REVENUES
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Financial crisis
Dot-com
bubble burst

13. PREDICTION OF DECREASE
All other things equal, a decrease in D51B revenue is
usually experienced during economic recession
A historically proven indicator for predicting such recessions
is the inverted bond yield curve

14. PREDICTING DECREASE
Yield curve of mid-2007 S&P Euro stock index

15. SHARE IN
TOTAL
REVENUES
AVERAGE FOR THE 2010-2000 PERIOD

16. Indicates the extent to which a
state relies on corporate
income tax revenue for funding

17. SHARE IN TOTAL REVENUE FOR EU-15
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
BE DK DE IE GR FR IT LU NL AT PT SE UK
EU-15 avg.
NMS-12 avg.

18. SHARE IN TOTAL REVENUE FOR NMS-12
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
BG CZ EE CY LV LT MT PL RO SI SK
EU-15 avg.
NMS-12 avg.
New member states rely more on corporate
income tax by 1% on average

19. More than 16% of Cyprus’ tax revenue
is made up of this tax
The second is Luxemburg with cca.
15%
For Estonia, this share is 1.5% (0% tax
rate if you reinvest your profits)

20. STANDARD DEVIATION OF SHARE IN TOTAL REVENUES
0%
1%
2%
3%
4%
5%
6%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
stdev eu-27 stdev eu-15 stdev nms-12
NMS-12
EU-27
Eu-15
Disparities regarding the share of D51B in
total revenues have been increasing since
2004

21. SHARE IN
GDP
MEASURED FOR 2010-2000

22. Shows the relationship
between the amount of
corporate income tax revenue
and the size of the economy

23. SHARE IN GDP FOR EU-15
0%
1%
2%
3%
4%
5%
6%
7%
BE DK DE IE GR FR IT LU NL AT PT SE UK

24. SHARE IN GDP FOR NMS-12
0%
1%
2%
3%
4%
5%
6%
7%
BG CZ EE CY LV LT MT PL RO SI SK
The corporate income tax revenues are very
high in Luxemburg and Cyprus
New member states show a higher degree of
divergence

25. STANDARD DEVIATION OF SHARE IN GDP
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
stdev eu-27 stdev eu-15 stdev nms-12
NMS-12
EU-27
Eu-15

26. CHANGE IN
D51B
REVENUES
MEASURED FOR 2010-2000

27. CHANGE IN D51B REVENUE FOR EU-15
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
IE DE BE DK GR FR IT LU NL AT PT SE UK

28. CHANGE IN D51B REVENUE FOR NMS-12
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
EE PL BG CZ CY LV LT MT RO SI SK

29. CONCLUSIONS

30. Luxembourg, Cyprus and the Malta rely the most
on this tax for financing and Estonia the least
On average, new member states rely on this tax
more
Differences in the amounts of corporate tax and
their extent of use is growing in the EU
The inverted yield curve is usually a good signal
that there could be a decrease in D51B revenues
soon