Due to legislative unpredictability, which increasingly affects small and medium-sized businesses, more and more entrepreneurs postpone or completely stop investments in business development - claims NextUp, a software solutions company that implements any tax change in the software they develop for business, in contact with over 6,000 SMEs.
In recent years, but especially in the last 18 months, there have been numerous changes in the tax regime for companies in Romania, with both tax increases and the introduction of more taxes and the elimination of some tax facilities. According to NextUp representatives, legislative instability is at an unprecedented level in Romania - not only are tax changes extremely frequent, but many come into force in a very short time, in a few weeks, in a few days or even from one day after another. The impact on a company's budget is sometimes direct, immediately strong. If the most known to the general public are the changes brought by e-Invoice, which generated total chaos, and those of e-TVA initially announced in June that will come into force in July, in practice the tax changes are much more numerous. Specifically, in 2023 there were 219 changes to the law with a direct impact on companies, and in 2024, until the end of July, there are 124 tax changes, according to the laws published online by ANAF.
"Many of these changes come into force in record time, even from today to tomorrow, and without clear and documented rules of application. Communication from state institutions is poor, not at all transparent, and the entrepreneur leaves the responsibility of applying the law correctly to the accountant. Digitization at the state in the last year has meant for accountants stress and more manual work, which, unfortunately, the software cannot always take over - for example, those explanatory VAT notes, which the accountants will have to prepare by hand . Frequent changes with an impact on the company's budget means waiting. We are waiting to see what we have to pay, to know how much we can invest, to stretch out as much as our comforter allows. That is why, in this context, many companies no longer make business investments and, as a result, either barely survive or postpone growth. Moreover, in the business environment we experience an atmosphere of insecurity, caused by the lack of predictability created by officials. Entrepreneurs are willing to make investments, including in digitalization and automation of operations through the use of suitable ERP software, in the development of the team and in the opening of new points of work or in other forms of expansion. But, in light of the new fiscal regulations that have eliminated certain facilities and increased certain taxes, companies are forced to take drastic cost-cutting and development measures, which basically mean even less money for the state budget. From our point of view, these sudden changes in direction and taxes are not good for the business environment at all, because entrepreneurs do not know what to expect and live in total unpredictability", declares Roxana Epure, Managing Partner of NextUp.
Among the effects of these fiscal changes is the risk of bankruptcy for certain companies
Legislative instability affects SMEs the worst, with many being impacted by the tax changes and consequently struggling to return to past profitability figures, adds NextUp, which implements any tax changes in software used by thousands of companies in Romania. Unsurprisingly, small businesses are the most affected. As such, only in the first 4 months of the year, more than 32,000 companies closed their activity, being 44% more than in 2023, according to data from the National Office of the Trade Register. The delisted firms are from various fields of activity, including wholesale and retail trade, motor vehicle and motorcycle repair, agriculture, forestry and fishing, information and communications, professional, scientific and technical activities or construction, meaning that the tax changes have repercussions on a general level, not just in particular cases.
"We can talk about unpredictability and legislative instability at the moment in Romania, and this makes planning and business development difficult, both for large companies and for small entrepreneurs. Many entrepreneurs prefer to remain cautious, being forced to make decisions against business development, and postpone investments indefinitely. This is unfortunately the consequence of the lack of clarity regarding economic and fiscal policies. Transparency on the part of the state is essential to foster confidence among investors and the business environment. Because, yes, the tax changes, as they are implemented now, can lead to an increased risk of bankruptcy among many companies", adds Roxana Epure, Managing Partner of NextUp.
Suggestions for authorities: what changes to make for business
As a provider of law changes in ERP, management and accounting software for businesses, NextUp hopes for a collaborative attitude from the state towards the private environment and calls on the authorities to operate legislative changes in a fair way for both part.
"The business community wants greater stability and transparency in economic decisions from the government, so that companies can plan and invest in the future with confidence. Without these elements, the economy risks stagnant investment and increased difficulties for businesses, especially small ones, which are already vulnerable. By offering software where we have to operate every tax change in a timely manner, so that companies can carry out their activity without interruptions and without risking sanctions, we know what businesses want from the authorities: to give taxpayers more time to adapt to new changes and tax increases in order to have more predictability in business, adopt a collaborative attitude and consult the business environment in the fiscal approach. Last but not least, to ensure that they have a functional digital infrastructure for companies' compliance with fiscal changes, such as e-Invoice or SAF-T. Entrepreneurs, accountants and employees in Romania want a change in the approach of state institutions in making decisions, so that we can all continue to pay taxes and contribute to the development of Romania", concludes Roxana Epure, Managing Partner of NextUp.
NextUp is the developer of ERP software that saves entrepreneurs time with red tape, such as e-Invoicing. The NextUp software is adapted to local businesses and used mainly in online retail, traditional retail, production, distribution, construction and services, to automate repetitive activities that consume resources and optimize business processes and forecasts. NextUp has over 6,000 customers, with an average of 5 users per company. Creating software for the efficient management of business operations and business development, NextUp strives for an efficient and advantageous collaboration between the state and the private environment.
