FIC supports the strategic approach of key areas in the medium and long term, as is the case of the fiscal framework, which should be analyzed from the perspective of the results of tax collection and contributions to the state budget. At the same time, the focus should be on economic development, by identifying the elements that need to be adjusted and the sustainable solutions for the state and for taxpayers. In the difficult macroeconomic context marked by the effects of the latest crises (pandemic, energy market, inflation, etc.) it is vital to identify recovery measures that will ensure economic and social balance. In 2022, the Ministry of Finance (MF) introduced a series of measures as a first step towards a more comprehensive tax reform. FIC took part in several discussions with MF in order to identify the best solutions for ensuring the sources of contribution to the state budget, and also the sustainable development of the economy.
Several changes have been introduced at the national and European levels in the field of tax legislation:
Consultation between the state authorities and the business community is essential to review both draft legislation and the implementation of existing legislation. This enhances the quality of legislation and supports its uniform application. There is still a continuing problem of legislation being passed quickly, often at very short notice, and with little time for the business community to have effective input. Although the Ministry of Finance has several structures designed to enable consultation with private stakeholders on different areas of interest in relation to public policies (e.g. the Directorate for Public Policy and Monitoring of Legal Acts and the Unit for Communication, Public Relations, Mass-Media and Transparency), in practice there is hardly any real process of consultation with the business environment on these issues. Furthermore, tax inspectors’ interpretations of legislation change frequently, and new interpretations are also applied to the past. This means that, in practice, the rules can change unpredictably and dramatically.
Moreover, instead of focusing on solving essential problems related to collection, such as fighting fiscal evasion in connection with VAT and excise duties in sensitive sectors (e.g. tobacco, alcohol, and grain), as well as combatting undeclared work, the tax authorities often carry out quite aggressive fiscal inspections on taxpayers which are some of the most important contributors to the state budget. These inspections can often last for long periods, disrupting business and ultimately hampering the ability of these businesses to generate revenue.
In practice, there are various situations in which the differences in the interpretation of tax legislation caused either by a lack of a proper understanding of the factual or legal situation in the case in question by the state authorities, or by the lack of clarity of the law lead to the initiation of legal procedures, often in cases of reduced complexity, but which have a significant duration. These procedures add an unnecessarily burden to the workload of the courts, hence leading to a decrease in the quality of the operation of judicial system, and also discourage investment, because they demonstrate a lack of predictability both in terms of the interpretation of the law, as well as the approach taken by the administrative and judicial authorities.
The fiscal authorities often focus aggressively on companies that are large contributors to the budget. This creates a risk of seriously undermining Romania’s image in the international business environment, the media and diplomatic circles, as well as with EU authorities.
If this problem continues, the immediate consequence will be a likely fall in foreign investment in Romania, while existing investors can be expected to reduce their presence, revise their expansion strategy, or even leave Romania altogether in search of a more mature and predictable environment. This would have a significant impact on Romania’s development and the country would become considerably less competitive on the global market in terms of attracting and maintaining foreign investment.
On the positive side, in the economic-social context of the last three years the state has offered significant support to help taxpayers get through the problems caused by the COVID-19 pandemic. The tax authorities implemented certain favourable tax measures such as (I) Granting tax benefits for annual income tax, social insurance contributions and health insurance contributions due by individuals; (II) Extending the deadline for submitting the Single Declaration for income tax and social contributions due by individuals, the deadline for submitting Form 230, as well as the deadline for payment of the income tax and mandatory social contributions due by individuals until 30 June 2020 (inclusive); (III) Introduction of certain tax facilities for the stimulus packages/bonuses granted by employers during the state of emergency period to employees whose activity involves direct contact with the public and who were at risk of infection with covid (IV) Granting tax benefits in relation to the annual building tax and the monthly building tax; (V) Cancellation of certain ancillary liabilities (VI) Deferral of tax payments. Furthermore, the authorities extended certain social protection measures and have issued norms for the regulation of the right to stay in Romania for foreign individuals, starting from 15 May 2020, in the context of the pandemic. All these measures, which aimed to support businesses in the context of the pandemic, were welcome. In this respect, we consider that measures such as the extension of the facility for tax exemption for reinvested profit and for investments in assets used in production and processing activity, as well as in assets representing technology, or tax facilities for research and development activities which entered into force starting from 1 January 2023 are welcome considering that they support the development of the business environment.
Clarity, stability, and predictability in fiscal legislation as well as in its implementation and interpretation are critical conditions in investment decisions. Any change in legislation, including its interpretation, should be adopted after consultation and duly applied by the tax authorities only for the future and not retrospectively.
The FIC recommends a more regular and consistent dialogue between the business community and Ministry of Public Finance (MFP) and National Agency for Fiscal Administration (ANAF) representatives on the predictability of the law and its uniform application. The Ministry should consider setting up a specific structure (Unit/Office) to organise specialised consultation/dialogue with the business environment on the preparation/revision of all legislation. This structure should act as a central hub between experts in the Ministry and the general public, assume the role of contact point and design transparent procedures for bi-directional interaction with external stakeholders.
The FIC also urges the MFP to give the business community more time to review draft legislation, so that companies have sufficient warning so as to be able to understand and comply with their tax obligations. The FIC also recommends the application of the In dubio contra fiscum principle, based on which each time a legal provision is unclear, it should be interpreted in favour of the taxpayer.
The FIC considers that improving transparency should be a top priority for the authorities, as this would lead to an increase in the predictability of the Romanian tax environment and would enhance trust among current and future investors. Lack of transparency in the legislative process seriously compromises the potential for economic development, mainly because it acts as a deterrent to the attraction of foreign direct investment. A consistent and coherent interpretation of legal provisions, aimed inter-alia at eliminating situations where different views have been expressed, in relation to sometimes controversial retroactive application of certain legal provisions, would greatly contribute to improving transparency.
Cooperation is the key to setting up a more transparent and predictable environment and in order to nourish that, the FIC further proposes a number of steps to deal with the following concerns which have been identified:
Creation of a database with non-binding and binding rulings
Improvement in the process of issuing binging ruling (SFIAS), advance pricing agreements (APAS) and non-binding opinions
Increased cooperation and communication between the tax authorities and the taxpayers during tax inspections
A clear and detailed procedure regarding the process involved in solving a mutual agreement procedure
Since in practice there are a lot of cases when Mutual Agreement Procedures take a very long time to reach a conclusions and there is a lack of transparency at the level of the taxpayer with respect to the solving process, FIC recommends for a detailed procedure to be issued in order to increase the level of transparency and predictability for any taxpayer that considers initiating a MAP or is already involved in an opened MAP, creating a more transparent environment regarding the obligations and rights of the taxpayer and will also provide a clear timeframe of the MAP procedure and an update status related to the issuance of a solution/conclusion. While a general procedure already exists, it only refers to general deadlines and does not ensure transparency over the process in itself.
The interpretation of Romanian and applicable EU tax legislation by ANAF and taxpayers remains one of the main areas of dispute during tax inspections.
Practice has shown that tax inspection reports and assessment decisions issued upon the closure of tax audits are frequently cancelled later in courts, following appeals filed by taxpayers. This means the interpretation of the courts is based upon a legal assessment process which should be understood and assimilated by both ANAF and taxpayers. In these situations, ANAF has had to assume a series of costs, not only in the form of compensatory damages paid to taxpayers, but also in terms of time and resources allocated to litigation which they lose. Similarly, taxpayers face significant costs for court actions, as well as uncertainty with respect to applying a tax treatment until the court issues its decision.
A consolidated database with traceability features for each case at the different courts in Romania, bringing together the tax decisions and rulings issued by Romanian courts, would bring three main benefits: 1. It would lead to an improvement in ANAF’s resource allocation process and a better assessment of costs vs. opportunities and 2. It would assist unitary application of legislation in Romanian courts, in proceedings judging the same underlying principle. 3. It would allow taxpayers to apply the jurisprudence to their cases and therefore reduce the risks of disputes with ANAF.
The FIC recommends the creation, in partnership with the Ministry of Justice, of a free of charge database of existing national jurisprudence on tax issues, allowing traceability of legal actions from one court to another. In particular, tax decisions made by high courts, including Inalta Curte de Casatie si Justitie (ICCJ), should be easy to access by all interested parties. The FIC also recommends the creation of specialised sections in Romanian courts focused only on tax matters. To assist this process, the FIC recommends specific professional training for judges, with the help and the participation of the institutions required to ensure the institutional framework for the training of judges i.e. the Supreme Council of Magistrates (CSM), the National Institute of Magistrates (INM) and with the support of the Romanian Chamber of Tax Consultants (CCF).
Tax evasion creates unfair competition, putting those who comply with the law at a disadvantage, and reducing state budget revenues.
The FIC welcomes and supports the ongoing efforts of the Ministry of Finance and ANAF to combat tax fraud and evasion, smuggling, and counterfeiting. However, tax inspections are not always focused efficiently, so as to improve the level of tax collection to the state budget. Tax evasion and smuggling, which affect both direct and indirect taxes, continue to be a problem.
In terms of cigarette smuggling, OUG 85/2022 was a welcome step, by which was updated to include the provisions of CCR Decision 176/2022. The ordinance establishes a single criterion, the quantity of 10,000 cigarettes, for the offence of smuggling, regardless of the place it is committed, which simplifies procedures. Furthermore, the Police and the Gendarmerie may now carry out checks in markets, cattle fairs, and metro stations, which are the areas in which illegal trade has been mainly carried out. In July 2022, as a result of the efforts and programmes carried out by the authorities and industry, cigarette smuggling reached a historic low of 6.1% (Novel study). Over the past three years, the average level of illegal trade has remained low, below the European average of 10%.
In order to maintain a low level of cigarette smuggling, the five-year excise duty schedules for cigarettes and other tobacco products adopted recently should be respected. Cooperation between producers and law enforcement institutions should be strengthened. This would provide additional resources and expertise to government agencies to combat smuggling and tax evasion.
Cooperation between taxpayers and law enforcement agencies should be enhanced. This would provide additional resources and expertise to government agencies to fight smuggling and tax evasion.
Reform of ANAF should continue, in order to eliminate the existing shortcomings within the tax administration, but also to create an integrated public IT system that connects different authorities (such as tax, health, local administration, courts, and the land registry).
As the introduction of SAF-T (Standard Audit File) is in its initial phases, ANAF should establish internal review procedures and allocate the necessary resources to process the significant amount of information filed by taxpayers.
While the need to increase budget revenues and fight tax evasion is fully appreciated by the business community, the FIC recommends a prudent and rational approach as regards future actions to be taken. Consequently, the focus of tackling tax evasion investigations should be on high-risk taxpayers based on a prior thorough and transparent risk analysis, rather than placing an additional burden on trustworthy taxpayers, which can slow down or even stop their business activities, which in turn generate budget revenue. Aggressive inspection practices can only distort cooperation between the business environment and the tax authorities and have the potential to lower the level of trust taxpayers have in the authorities.
Intensified efforts to reduce the shadow economy are a more effective way to increase budget revenue than aggressive targeting of honest taxpayers for auditing, which creates the potential for a reduction of amounts collected from certain taxes and contributions.
The “voluntary disclosure” notion is a practical solution to increase voluntary compliance for individuals. This concept, combined effectively with increased financial penalties for tax evasion and lower interest for those that comply, could bring significant medium and long-term benefits by increasing budget revenue without the need for additional measures. To be effective, the Voluntary Disclosure Programme would require the existence of a level of credibility in terms of the tax authorities’ capability to discover hidden assets held by individual taxpayers, both domestically and abroad, in order to incentivise use of the Voluntary Disclosure Programme as an option to avoid more severe consequences.
Disclosure would be attractive to those targeted as it could reduce their tax liability and/or penalties and waive the possibility of criminal prosecution, should the taxpayer come forward when this programme is made available.
Another important factor to ensure the success of a Voluntary Disclosure Programme would be for it to have an efficient communication component. Both the OECD and the IMF advise that tax authorities should present taxpayers with the terms and conditions of Voluntary Disclosure Programmes clearly so that the existence of penalties is well-known, and hence non-compliance is discouraged. In addition, Voluntary Disclosure Programmes could increase future voluntary compliance, if credibly advertised as a “last chance” and complemented with other compliance-enhancing measures.
Tax compliance and Voluntary Disclosure Program
The FIC recommends a proactive and consistent approach to increase voluntary compliance and to implement a VDP as described in the OECD’s Update on Voluntary Disclosure Programmes: A Pathway to Tax Compliance, 2015, https://www.oecd.org/ctp/exchange-of-tax-information/update-on-voluntary-disclosure-programmes-a-pathwaypto-tax-compliance.htm.
This approach should include higher financial penalties for individual taxpayers who do not comply with their tax obligations, and incentives for those taxpayers who regularly fulfill their obligations on a timely basis. This would facilitate lowering the tax gap, reducing the size of the shadow economy, increasing future tax compliance and generating a level playing field.
Experience shows that this type of incentive leads to good results and would go hand in hand with making compliance easy through the implementation of easily accessible tax compliance platforms.
The FIC recommends a careful analysis of the sensitive balance between incentivising compliance and increasing penalties for individual taxpayers.
Refund requests are frequently refused for spurious, bureaucratic reasons. This causes severe hardship to businesses and can even lead to bankruptcy, which ultimately has a negative effect on budget revenue too.
Currently, interest on late tax refunds is only granted to taxpayers under certain conditions and applications are often ignored by the tax authorities, forcing the taxpayer to litigate to recover the interest.
Consequently, Government Emergency Ordinance no. 226/2020 is a welcome development. This states that VAT amounts requested for reimbursement based on the VAT returns submitted by taxpayers should be refunded without a prior VAT audit.
The tax authorities and/or the Government should take the necessary measures to extend the current legal deadline for the settling of VAT refunds with subsequent rather than prior inspection. Moreover, swift refunds should be ensured for companies and individuals which are eligible, without unnecessary bureaucratic obstacles or delays.
If delays do occur, the tax authorities should be required to pay interest automatically based on the tax record of every company at the time the refund is made, provided that legal requirements are met.
As of 2021, the corporate tax consolidation regime was introduced for the Romanian entities, a long-expected regime, which may contribute to the attraction of investors (groups of entities) in Romania, by creating a true and authentic holding regime.
Although corporate income tax consolidation was a long-expected reform which benefits Romanian groups of companies, the existence of certain restrictive eligibility criteria to be considered a member of a corporate tax group and the potential penalties applicable, in certain specific conditions, to the fiscal group once it has been constituted, have resulted in an extremely low number of group entities applying the corporate tax consolidation system, which means that in practice few have derived the benefits of this reform.
Hence, in order to increase the attractiveness of the corporate tax consolidation system, the FIC recommends the regulation of certain tax measures aiming to reduce the quota of the minimum holding for members of the group, the repeal or limitation of the period when late payment charges are imposed in the case of the group’s dissolution or the exit of group members, as well as the repeal of the penalties related to the initiation of a tax audit on a member exiting the corporate tax group in the case of reorganisation or sale of shares of the members.
Although the FIC welcomes the draft accounting regulation legislation on the way the settlement of corporate tax among members should be booked, the FIC also recommends the adoption of a specific procedure to determine the quantum of the corporate tax that should be allocated to each individual member.
Until 2021, foreign companies which used Romania as an entry point to the EU for goods imported from outside the EU were required to register for VAT purposes in Romania and declare the transactions carried out.
In practice, this measure has proven to be one of the main reasons why foreign companies have been reluctant to route their imports through Romania and has led many to use other EU countries instead (e.g. Germany, the Netherlands, Belgium).
Consequently, the FIC welcomes Law no. 296 of 21 December 2020, which amended the Fiscal Code to include the concept of VAT global representative. The law states that taxable persons not registered for VAT purposes in Romania, which import into Romania goods that have been transported from a third territory or a third country, may designate an authorised tax representative to fulfill the Romanian VAT obligations.
The implementation of these measures could provide a valuable boost to the local economy, especially in Constanta, bringing particular benefits for Romanian transport/logistics companies.
However, in order to allow a proper review of the global business model of companies and the correct implementation of the new flows of operations, we would encourage the passing, as a priority, of legislation to establish the procedure and conditions for appointing the authorised fiscal representative (mentioned also in the content of the provision by which this new possibility is introduced - Article 316, paragraph 6^1 of the Fiscal Code).
Four years since it first came into force, the Offshore Law (Law nr.256/2018) was finally amended, in 2022, to implement new, more favourable provisions on the exploitation of natural gas in the Black Sea. This measure seems to have partially unlocked investment in the area, with the exploitation phase finally starting, currently in one offshore block, with others to follow.
However, for the purposes of Romania’s energy independence, especially considering the current social-economic context, the above amendments have been long overdue.
One the most important changes made is to the tax regime for investments in this area, which has become more permissive. In addition, the amendments have confirmed that the tax will indeed be a deductible expense for corporate income tax purposes – an expected clarification, considering the unclear provision in the original version of the law.
Other amendments of high impact for investors have been the increase from 30% to 40% of the maximum level of deduction of investments in the upstream segment (exploration and production) for the determination of the above tax, as well as the fact that the Offshore law in its updated form permits such investments to also be deducted from the producers’ corporate income tax result – decreasing the significant tax burden of investors in the Black Sea exclusive economic area.
All of the above, as well as the fact that the level of taxation for companies will remain unchanged throughout the duration of the concession agreement, were implemented in an effort to create a more stable, predictable, neutral, flexible and competitive legal framework, which is necessary to attract investments and in line with FIC recommendations in previous periods.
At the same time, previous limitations such as the 90% “windfall tax” on the difference between the current purchase price and the price imposed prior to market liberalisation, were not renewed.
However, as a result of the current economic-social context and in line with EU regulation on an emergency intervention to address high energy prices, the overall energy sector in Romania has been affected by various tax issues over the last year. For example, for FY22 and FY23 a solidarity contribution is payable by taxpayers with oil & gas extraction CAEN codes obtaining more than 75% of their turnover from these activities. The contribution rate is 60% and is calculated by reference to both current and past taxable profits. It may also be payable, under certain conditions, by affiliated entities of the aforementioned entities, regardless of their area of activity.
In addition to the above aspects, certain clarifications should be made to the law to align the territory of Romania in the Black Sea from a customs and excise and VAT perspective as currently the customs territory of Romania is considered as up to 12 maritime miles, while, for instance, from a VAT perspective Romanian territory goes beyond this area by up to 200 miles (“exclusive economic area”). Failure to correct this mismatch could create multiple obstacles which could also delay investments in the Black Sea area.
Many other legislative amendments are expected to come into force in the coming months, potentially delaying investments in the Black Sea area even more.
Substantial investments are needed in the energy sector to ensure energy security and independence for Romania. The clarity, stability, predictability, and transparency of the legislative framework remain vital criteria for investors in this sector.
In the past year, most measures applicable to this sector were adopted through Emergency Ordinances, without the necessary time for consultation. Consequently, the FIC recommends that future amendments affecting the energy sector, especially those with an impact on operations carried out within the Black Sea Exclusive Economic Area should be thoroughly discussed with the business environment.
Given the tight deadlines and multiple changes in the last year, players in the market are still making major efforts to adapt and be in compliance with these new regulations. As such, the FIC also recommends that future amendments, if absolutely necessary, should take into account the need for stability and should be designed so as to have minimal effects on the existing and future business plans of investors in this strategic sector for the country.
The reinvestment of profits helps companies to develop themselves and, indirectly, to contribute to the development of the overall economy and, by implication, to an increase in budget revenue.
In Romania, the tax legislation stipulates for a couple of years that companies may benefit from the exemption of the profits reinvested into technological equipment, computers and peripherical equipment, cash registers, informatics programs, as well as the right to use of informatics programs, produced and/or acquired, which are commissioned and used for business purposes.
As from 1 January 2023, the application of the tax incentive was extended to other assets used in the production and processing industry and to assets involved in re-technologisation processes. This measure is particularly welcome from the point of view of the business community, given the current economic challenges.
In order to further boost investment, we recommend the following:
The mandatory private pension system (2nd Pillar), currently covering some 7.9 million participant members in Q3 2022, must be protected by maintaining legal stability and predictability.
The voluntary private pension system (3rd Pillar), managing the savings of more than 600,000 participants in Q3 2022, should be consolidated by gradually increasing tax incentives to facilitate taking up of these funds by more categories of workers. More significant tax incentives have already been implemented in neighbouring EU Member States to encourage private retirement savings and, by implication, the reduction of pressure on the public pension budget on a long-term basis.
Private pension funds provide stable finance for the economy. Today they contribute to the development of the financial markets in Romania and, going forward, they will reduce pressure on the state budget in the context of an ageing demography.
The FIC welcomes the increase of the contribution rate directed to mandatory private pension funds (2nd Pillar) from the current 3.75% to 4.75% as from 1 January 2024. We see it as an intermediate step to reaching the 6% contribution rate, as set out initially in Law No. 411/2004, as soon as possible. Additionally, we recommend increasing the fiscal deductibility applicable to employers’ contributions to voluntary pension funds (3rd Pillar) from the current 400 euros per year to 1,000 euros per year.
Government Emergency Ordinance no. 3/2017 repealed the provisions set out in 2015 in the Fiscal Code (Law no. 227/2015) on the thresholds applicable for the calculation of employers’ and employees’ social insurance and health insurance contributions. Under the 2015 Fiscal Code, in order to stimulate the employment of highly skilled professionals in Romania and eliminate discrepancies in taxation of employees compared to independent work, the calculation base for employees’ social insurance and health insurance contributions was capped at 5 times the gross average monthly salary (5x2,681 lei during 2016). The employers’ social insurance contribution calculation base was capped at 5 times the average gross salary income, multiplied by the number of insured employees, and the health insurance contribution calculation base was capped at the level of the amount on which the individual health insurance contribution was due.
The health insurance for other types of income, such as from independent activities, intellectual property, investment income, and agricultural activities is capped and, from 1 January 2023, an ascending scale will apply, depending on the level of income, of 6, 12 and 24 times the gross minimum salary with a maximum of currently around 72,000 lei.
The maximum limits for employees were eliminated from February 2017, when employers’ and employees’ social insurance and health insurance contributions became payable on the entire gross salary income earned by employees. These provisions were also maintained after the shift of the social security contributions from the employer to the employee under Government Emergency Ordinance no 79/2017 applicable from 1 January 2018. The result is that there is currently a very high (uncapped) social security cost for highly skilled professionals.
Following discussions with the business sector, through OG 16/2022 (now Law 370/2022) a new five-year timetable (2022-2026) was adopted to increase excise duties on cigarettes. The rule according to which, for other excise goods, the increase is made based on the inflation rate, on 1 January of each year, has been adjusted. For cigars, fine-cut tobacco intended for smoking and other tobacco products, timetables for gradual annual rises similar to cigarettes have been adopted (no longer indexed to inflation).
As from 1 August 2022, the level of excise duties on tobacco products increased for each category by approx. 28-31 lei / year. For cigarettes, the minimum excise duty increased from 97% to 100% as from 1 August 2022, and the ad-valorem excise duty is expected to decrease by 1p.p. per year, from 14% in 2022 to 10% in 2025. The total excise duty will increase from 563.97 lei/1,000 cigarettes to 718.97 lei/1,000 cigarettes in 2026.
Increases are also foreseen for non-harmonised excise duties: the excise duty on nicotine-containing liquid will be 1.03 lei/ml in 2026, and the excise duty for heated tobacco products will reach 50% of the level of excise duty on cigarettes in 2024 (1,094.93 lei/kg), then increasing to 1,198.28 lei/kg in 2026, but keeping the same share of 50% of the level of cigarettes.
For fiscal predictability and for the consolidation of excise tax revenues, the 2022-2026 timetable should be maintained, without any future adjustments and amendments, as was the case previously with the 2017-2022 timetable, which was amended three times (by OUG 114/2018, OUG 89/2019 and Law no. 296/2020).
In the Brussels negotiations on the revision of Directive 2011/64/EU (TED) on the structure and rates of excise duty applied to manufactured tobacco, Romania’s position should reflect the excise timetables adopted in 2022. The increase in excise duties must be gradual and sustainable, and in the event of a sudden and significant increase, Romania must support the preservation of the mechanism provided for in Directive 2011/64/EU and that preceding it, through which eight Central and Eastern European countries have benefited from three transition years each (until 31 December 2017, and previously until 31 December 2010 - three years after accession) to reach the minimum level of excise duty on cigarettes of EUR 90/1,000 cigarettes (and EUR 64).
The harmonisation of the excise duty on cigarettes at European level must take into account both purchasing power (in Romania this is at 55% of the European average) and the geopolitical context (Romania has over 2,000 km of border with non-EU states and a war on its north-eastern frontier, and the phenomenon of illicit trade might be encouraged if excise duties are too high).
The National Recovery and Resilience Plan is a useful tool in Romania’s economic development. It is widely acknowledged that one of the engines of economic and social development for Romania is the financial resources provided by the EU. The absorption of these funds has allowed Romania to register one of the highest economic growth rates in Europe since its accession to the EU. The PNRR provides free grants that aim to help Romania to be more efficient from an economic perspective while ensuring financing on advantageous terms. From the perspective of the fiscal framework, the PNRR provides for reforms related to income tax, social security contributions and areas of VAT legislation. Specifically, the reforms that are targeted by the PNRR are: The reform of the National Agency for Fiscal Administration (ANAF) through digitalisation; the modernisation of the customs system and the implementation of electronic customs; the improvement of the budgetary programming mechanism; the revision of the fiscal framework; the creation and operationalisation of a National Development Bank; the reform of the public pension system.