Fiscal instability hits IT: Industry feeling effects of tax decisions and anticipates a difficult 2025

Business Forum
Over 80% of IT companies, members of ANIS, believe that the tax measures adopted in 2023 have had a negative or strongly negative impact on their financial results, and the changes announced at the end of December 2024, with implementation from January 1, 2025, have generated additional uncertainty, according to the results of the ANIS Sentiment Survey 2024, the annual barometer on the state and prospects of the IT industry in Romania.

The survey, carried out in December 2024/January 2025 among members of the Association of the Software and Services Industry (ANIS), highlights a combination of frustration, uncertainty and moderate optimism for 2025. The IT industry in Romania continues to face challenges generated by the fiscal measures enacted at the end of 2023 and exacerbated by untimely tax decisions at the end of 2024. Although companies are anticipating moderate growth opportunities, fiscal unpredictability strongly influences plans for 2025.

Industry sentiment during 2024 and the impact of the partial phase-out of tax breaks

The decision to partially eliminate the tax facilities in 2023 generated significant effects on IT companies:

  • 63.2% reported a negative impact of the partial phase-out of the facility on financial performance in 2024, and 57.9% indicated increased labor costs as a major negative factor.
  • 34.2% of companies were able to grow their team in 2024, down from initial estimates of over 64%.
  • 21.1% of companies ended 2024 with declining revenues, compared with just 10% that had anticipated such a situation at the start of the year.

Despite the challenges, companies continued to explore opportunities by diversifying portfolios and expanding into foreign markets, elements reported by 65.8% of respondents.

Tax changes at the end of 2024: Frustration and uncertainty

The tax decisions made at the end of December 2024, with immediate implementation on January 1, 2025, surprised the industry and heightened feelings of uncertainty:

  • 81.6% of respondents see potential tax increases as the biggest threat to their business, followed by lack of tax predictability (71.1%).

In addition, the complete removal of tax breaks, initially scheduled for 2028, is perceived as a decision that will affect Romania's global competitiveness in the IT sector.

Estimates for 2025: Increased caution and obvious risks

IT companies anticipate moderate turnover growth and stabilization of teams in 2025, but remain concerned about the unpredictability of the business environment:

  • 44.7% of respondents expect revenue growth in 2025, while 47.4% anticipate stagnation.
  • 36.8% of companies foresee team expansion, but the majority (52.6%) believe the number of employees will remain constant.

At the same time, companies emphasize the need for an attractive tax environment and coherent public policies to support the competitiveness of the IT sector.

Priorities and solutions for a sustainable IT sector

ANIS members consider a number of measures essential to counter the negative effects of tax changes:

  1. Fiscal predictability - an imperative for strategic planning and investment (47.4%).
  2. Reducing the tax burden on labor - considered a top priority by 76.3% of companies.
  3. Support research-development-innovation (R&D) - through grants and tax deductions, cited by nearly 50% of respondents.

"Survey data confirms the concerns of companies in the IT industry, in particular about tax and legislative instability. The impact of taxation on costs, employee motivation and global competitiveness is obvious. Romania urgently needs a real public-private partnership in order to provide a stable and attractive business environment capable of supporting this strategic sector," said Corina Vasile, ANIS Executive Director.

Romania's IT industry remains a key driver of the economy, but its future success depends on coherent public policies and support for innovation.

The Association of the Software and Services Industry (ANIS) is the representative association of the IT industry in Romania. ANIS has over 150 member companies, is a promoter of digitalization and has been representing the interests of the IT industry for 25 years, being a credible dialogue partner that can contribute to the creation of public policies that facilitate the use of technology for socio-economic development.

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Business Forum  |  15 January, 2025 at 2:09 PM