Kara Sears
Romania has long struggled with corruption and bribery, which has led to mass protests and resignations. The Romanian Criminal Code and other supporting laws criminalize active and passive bribery, including bribery of foreign officials. In 2024, Romania introduced Law no. 126/2024, which aims to combat tax evasion by imposing stricter penalties and providing incentives for the restitution of defrauded funds. The country has also implemented fiscal reforms for 2025 and 2026, impacting dividend taxation, VAT rates, excise duties, and payroll compliance. Given the history of bribery and corruption in Romania, it is worth examining whether the country's tax laws effectively discourage bribery or if they inadvertently encourage it.
| Characteristics | Values |
|---|---|
| Corruption in Romania | Serious problem |
| Romanian Criminal Code | Criminalises active and passive bribery |
| Law no. 78/2000 | Defines aggravated forms of bribery offences |
| Anticorruption Law | Individuals receiving a bribe face between 3 and 10 years' imprisonment |
| Tax evasion | Persistent issue in Romania |
| Law no. 126/2024 | Enhances Romania's ability to combat tax evasion |
| Fiscal reforms | Impact dividend taxation, VAT rates, excise duties, payroll compliance |
| Foreign bribery | Outlawed by treaty signed by economically developed countries |
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What You'll Learn
Corruption in the mining industry
Romania has a history of corruption, which has been described as "part and parcel of how the government and economy are run". Corruption is a significant risk for businesses operating in the country, and foreign investors often complain about complicated procedures, arbitrary rule application, and requests for bribes when resolving administrative tasks.
The Romanian Criminal Code and other supporting laws criminalize active and passive bribery, including the bribery of foreign officials. A company can be held criminally liable for corruption offences committed by individuals acting on its behalf. However, the government does not effectively enforce anti-corruption laws, and impunity is widespread.
In the mining industry, a notable case of corruption sparked mass protests across Romania. The Romanian mining company Rosia Montana Gold Corporation (RMGC), majority-owned by Canada's Gabriel Resources, obtained approval for a gold and silver mining project in Alba County in the Apuseni Mountains through fraudulent means, including bribery, fraud, and procedural rule-bending. The project was environmentally risky, and the mining company was investigated for money laundering and tax fraud. As a result of the public outcry, the government opposed the project and halted its development.
Another example of corruption in the mining industry is the case of Beny Steinmetz, an Israeli billionaire and mining magnate with a history of corruption convictions in multiple countries. Steinmetz acquired 16% of Gabriel Resources through an offshore company and a foundation in 2009. The Romanian government refused to extend the license for the Roșia Montană Gold Corporation (RMGC) after Steinmetz's involvement came to light.
To address corruption, Romania has implemented various measures, such as the Romanian Criminal Procedure Code (RCPC), which outlines the rules for criminal investigations, including corruption crimes. Additionally, Law no. 78/2000 specifies procedures for corruption crimes, such as mandatory criminal investigations by prosecutors and trials by specialized panels of judges. Romania has also adopted legislation to combat bribery in line with the Anti-Bribery Convention, a commitment made during its accession to the OECD.
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Tax evasion and anti-fraud measures
Romania has introduced major fiscal reforms for 2025 and 2026, impacting dividend taxation, VAT rates, excise duties, and payroll compliance. On December 31, 2024, Emergency Ordinance no. 156/2024 was published in the Official Gazette, bringing notable changes to Romania's fiscal policies.
In May 2024, Romania enacted Law no. 126/2024, which introduced significant measures to combat tax evasion effectively. This legislation includes stricter penalties for tax evasion, provisions for mitigating punishment under certain conditions, and measures to address the use of electronic systems for fraudulent purposes. The law also encourages the timely restitution of defrauded funds to the state and explicitly defines several activities as criminal offenses, with penalties ranging from imprisonment to fines.
Romania has taken steps to address corruption and bribery, with the Romanian Criminal Code criminalizing active and passive bribery, including bribery of foreign officials. The country has also adopted draft laws to implement the Anti-Bribery Convention, a commitment made during its accession to the OECD. The Anticorruption Law (Law no. 78/2000) defines aggravated forms of bribery offenses and outlines penalties for individuals and legal entities involved in bribery.
Despite these measures, corruption and bribery remain a serious problem in Romania, impacting the ease of doing business in the country. Foreign investors often face complicated procedures, arbitrary rule applications, and requests for bribes when dealing with administrative tasks related to business operations. The government has been criticized for not effectively enforcing anti-corruption laws, leading to widespread impunity.
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The Romanian Criminal Code
Romania's tax administration is considered to carry moderate to high corruption risks for businesses. While many companies consider the administration a significant obstacle to doing business, only a small fraction report paying bribes to tax officials. Similarly, a third of surveyed Romanian citizens believe the tax authorities are influenced by bribery and abuse of power, yet almost none report bribery during interactions with tax officials.
Law no. 78/2000 includes specific procedures for corruption crimes, such as mandatory criminal investigation by the prosecutor and trial in the first court by a specialized panel of judges. In all corruption cases, precautionary measures must be taken to ensure the recovery of damages or confiscation of assets. Passive bribery, or receiving a bribe, is explicitly defined.
In addition to bribery, the crimes for which legal entities may be convicted include unintentional bodily harm, health and safety offences, intellectual property rights offences, embezzlement, fraud, organized criminal group offences, illicit drug trafficking, money laundering, and tax evasion. To establish the guilt of a legal entity in an intentional criminal offence, it must be proven that the entity allowed or permitted the offence to occur, either expressly or tacitly. For unintentional criminal offences, it must be demonstrated that the entity's internal mechanisms were faulty and created an environment conducive to lawbreaking.
Romania has taken steps to combat bribery and corruption, such as adopting measures to implement the Convention on Combating Bribery of Foreign Public Officials in International Economic Operations and acceding to the Anti-Bribery Convention of the OECD. However, there are reports of the government's lack of effective enforcement of anti-corruption laws, with mass protests occurring in early 2017 against a decree that would have protected officials from corruption charges.
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Foreign investors and bribery
Foreign investors in Romania often complain of complicated procedures, arbitrary application of rules, and demands for bribes when resolving administrative tasks related to business operations. This includes cumbersome, time-consuming, and non-transparent bureaucratic procedures related to securing necessary zoning permits and property titles. The land administration in Romania carries moderate to high risks for business due to corruption and bribery.
The customs administration is also an area of concern, with foreign investors occasionally reporting corrupt practices and harassment by low and mid-level officials demanding bribes. Companies importing and exporting across Romania's borders often face burdensome procedures and frequent bribe requests. The tax administration is another area with moderate to high corruption risks, where complicated procedures and arbitrary rule applications can hinder business operations.
Romania has taken steps to address these issues, with the Romanian Criminal Code and other supporting laws criminalizing active and passive bribery, including the bribery of foreign officials. Companies can be held criminally liable for corruption offenses committed by individuals acting on their behalf. Additionally, Romania has adopted draft laws to implement the Convention on Combating Bribery of Foreign Public Officials in International Economic Operations, aligning with the provisions of the Anti-Bribery Convention.
However, enforcement of anti-corruption laws remains a challenge, with widespread impunity and a lack of respect for the authority of public services. This has led to a perception of high corruption risks for businesses interacting with Romania's public services. To combat this, foreign business associations in larger cities can provide support and shared knowledge for companies operating in this environment.
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The impact of fiscal reforms
Romania has introduced major fiscal reforms for 2025 and 2026, impacting dividend taxation, VAT rates, excise duties, and payroll compliance. These reforms are in addition to the country's ongoing efforts to combat tax evasion and corruption.
In May 2024, Romania enacted Law no. 126/2024, which introduces significant measures to enhance the country's ability to combat tax evasion effectively. This legislation aims to deter tax evasion and encourage compliance by imposing stricter penalties and providing incentives for the restitution of defrauded funds. The law defines several activities as criminal offenses, with penalties ranging from imprisonment to fines. For example, individuals who have caused financial damage of up to EUR 1,000,000 can avoid imprisonment if they fully cover the amount of damage, plus a penalty. This measure encourages the timely restitution of funds to the state.
Romania has also taken steps to address corruption, which is recognised as a serious problem that raises the risks of doing business in the country. The Romanian Criminal Code criminalises active and passive bribery, including bribery of foreign officials, and companies can be held liable for corruption offenses committed on their behalf. However, the government has been criticised for not effectively enforcing anti-corruption laws, and petty corruption, including irregular payments and bribes, remains common.
Romania's tax administration is perceived as carrying moderate to high corruption risks, with over half of companies considering it a major constraint to doing business. While less than one in ten companies report paying bribes to tax officials, more than one-third of surveyed citizens believe that Romanian tax authorities are affected by bribery and abuse of power.
To address these concerns, Romania has implemented reforms such as reducing the frequency of firm tax payments from quarterly to twice a year and introducing an electronic system for filing and paying taxes. These reforms limit direct encounters between companies and tax officials, reducing the potential for bribery.
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Frequently asked questions
No, Romania's tax laws do not encourage bribery. In fact, the country has enacted several laws and amendments to combat bribery and corruption, including Law no. 78/2000, which defines aggravated forms of bribery and other corruption offences. Romania has also adopted the Anti-Bribery Convention, demonstrating its commitment to fighting bribery and corruption.
Individuals receiving a bribe in Romania face between three and ten years of imprisonment, while those offering a bribe face between two and seven years. The punishments vary depending on the position of the receiver of the bribe, with increased punishments for individuals in positions of authority.
Romania has introduced several laws to combat tax evasion, including Law no. 126/2024, which imposes stricter penalties and provides incentives for the restitution of defrauded funds. The country has also implemented fiscal reforms for 2025 and 2026, impacting dividend taxation, VAT rates, excise duties, and payroll compliance.
Corruption, including bribery, is a serious issue in Romania, impacting the ease of doing business in the country. Foreign investors often complain about complicated procedures, arbitrary rule applications, and requests for bribes. While Romania has laws criminalizing active and passive bribery, the government has been criticized for not effectively enforcing these anti-corruption laws.
