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Romania
as a united entity (comprising the
principalities of Moldavia and Wallachia)
formed in the late 1850s, emerging
from Ottoman rule, and taking its current
name shortly thereafter. Its independence
was recognised in 1878 by the Treaty
of Berlin.In the First World War, Romania
joined the Allied Powers, gaining control
of Transylvania afterwards. Romania
initially fought on the side of the
Axis powers in WWII, although it later
joined the Allies, and was occupied
by the Soviet Union during and after
the war, finding itself increasingly
under Communist influence, leading
to the formation of the ‘People’s
Republic of Romania’, and the
abdication of the king. Nicolae Ceausescu,
in power from 1965 (until his overthrow
and execution in 1989) oversaw decades
of oppression and increasing poverty.
The influence of Communism continued
to dominate in the country until the
mid-1990s, but. since 1996, Romania
has increased ties with Western Europe.
It joined NATO in 2004, and the European
Union in 2007. Romania has a land area
of 238,391 sq km, and is situated in
South Eastern Europe, bordering the
Black Sea, between Bulgaria and Ukraine.
The population of Romania was estimated,
in 2009, at 22,215,421.
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The
capital of Romania is Bucharest, and
the country is divided into 41 counties.
The head of state is the President,
which since December 2004 has been
Traian Basescu, although he was suspended
by a parliamentary vote in April 2007,
but reappointed after a referendum
the following much. The Prime Minister
is the head of government, and is appointed
by the President. Since December 2004,
Calin Popescu has been the Prime Minister.
The bicameral Parliament comprises
the Senate (or Senat) and the Chamber
of Deputies. The legal system is based
on civil law, and has not accepted
compulsory ICJ jurisdiction.
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Romania
joined the European Union in 2007,
and after decades under Communist rule,
and a period of oppression and poverty
under the regime of Nicolae Ceausescu
(until his overthrow and subsequent
execution in 1989), the country has
increased ties with Western Europe,
and is increasingly embracing free
market policies. GDP was estimated
at USD271.4 billion in 2008. However,
GDP growth has slowed subsequently,
as the Romanian economy felt the impact
of the international financial crisis.
The Romanian authorities hope to be
ready to adopt the euro in 2014.
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Company
forms available in Romania, include
the Limited Liability Company (SRL),
the Joint Stock Company (SA), the General
Partnership (SNC), Limited Partnership
(SCS), and Partnership Limited by Shares
(SCA). Sole Proprietorships, Family
Associations, and Branches also exist.
The most commonly used company for
resident businesses is the Limited
Liability Company, which
must have minimum authorised share
capital of RON200, and can have just
one shareholder.
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The
corporate income tax rate is 16%, but
a 3% rateis imposed on qualifying small
companies (which must have between
1 and 9 employees, an annual turnover
of less than EUR100,000, and must be
either engaged in 'productive activity',
or in the provision of brokerage, banking,
insurance, or consultancy services).
A 16% withholding tax is imposed on
dividends paid to non-resident companies
(reduced to 10% for payments to other
EU countries in 2009), unless exemption
is available under the terms of the
EC parent-subsidiary directive. The
standard VAT rate is 19%. There is
a reduced rate of 9%, which applies
to medicines, some books and newspapers,
certain accommodation related services,
inter alia, exports are zero rated,
and there are also various exemptions.
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There
are no low tax opportunities as such available
in Romania, as following entry to the European
Union in 2007, tax incentives which had
been available for investment in Free Trade
Zones and Industrial Parks, and for significant
cash investments likely to have an economic
impact, were withdrawn. However, various
measures are available to qualifying entities,
including preferential treatment of tax
on gains (although there is no capital
gains tax as such) on shares listed on
the Romanian stock exchange, accelerated
depreciation, and tax benefits with regard
to reinvested profits.
[Further
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Tax
consolidation, either domestic or cross-border,
is not permitted in Romania.
A
16% withholding tax is imposed on dividends
paid to non-resident companies (reduced
to 10% for payments to other EU countries
in 2009), unless exemption is available
under the terms of the EC parent-subsidiary
directive.
[Further
Information]
A
16% withholding tax is imposed on dividends
paid to non-resident companies (reduced
to 10% for payments to other EU countries
in 2009), unless exemption is available
under the terms of the EC parent-subsidiary
directive. Additionally, a 16% withholding
tax is imposed on interest or royalties
paid to nonresident companies. However,
under transitional rules contained
in the Interest and Royalties Directive,
Romania is authorized not to apply
the exemption from withholding tax
until 31 December 2010. During this
transitional period, the Romanian withholding
tax on payments made to a company in
another member state can be up to 10%,
although treaties in place with other
countries may affect this. In 2007,
Romania had more than 70 Double Tax
Treaties in place.
[Further
Information]
Liberalisation
of the telecommunications sector concluded
in 2003 has led to rapid expansion
of the market, in particular with regard
to wireless services. In 2007, there
were an estimated 4.3 million fixed
lines in operation, and approximately
22.8 million mobile phones. Internet
users in 2007 numbered an estimated
12 million (2007).
[Further
Information]
The
currency is known as the New Leu (RON);
prior to the currency reform of 2005,
an earlier Leu (ROL) was in place.
RON1 is equal to ROL10,000. The central
bank is the National Bank of Romania,
which has primary responsibility for
monetary and exchange rate policy,
ensuring financial stability, oversight
of the country's credit institutions,
and the issuing of currency. Foreign
banks play a significant role in the
Romanian banking sector.
[Further
Information]
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