20220628-IMF-Romania_Technical_Assistance_Report_on_Improving_Revenues_from_the_Recurrent_Property_Tax_73页_1mb

Project No. F472-ROX-F096 - Fiscal Affairs Department
Results of the Mission Improving Revenues from the Recurrent Property Tax
Name of the Recipient Country: Romania
Mr. Adrian Câciu, Minister of Public Finance
Bucharest, Romania
Date: 17 March - 28 April 2022
Intervention Co-financed by the
World Bank / European Union’s Multidonor COVID-19 Capacity Development Initiave

Executive Summary

The analysis indicates that the recurrent property taxes (land and buildings) in Romania lack buoyancy, generating only 0.6% of GDP in 2021, significantly below the average of 1.8% in OECD countries and 0.9% in the EU-27. Key recommendations propose transitioning to market valuation, simplifying administration, and reallocating resources toward fiscal autonomy.

Contact:
Martin Grote / William McCluskey
Tel: [numbers omitted]
E-mail: [emails omitted]
Please direct correspondence regarding this technical assistance to Martin Grote or William McCluskey.

Document Title: [Provided as part of the message]

Chapter I: Revenue Importance of Taxes on Property
Key Points:
Current property tax in Romania constitutes a low share of GDP compared to European averages. Shortcomings include limited tax base growth, complex administration, and disparities between individual and corporate rates.

• Tax Structure: Current land and building taxes rest primarily on area-based assessments, failing to capture market values effectively.
• Administrative Gaps: Fragmented data systems hinder identification and valuation across municipalities.
• Fiscal Autonomy: Local ATUs lack the fiscal tools to manage their expenditures due to centralized revenue structures.

Chapter II: Current Property Tax Framework
Land Tax: Uses fixed per hectare rates, overly simplified and not reflecting local variations.
Building Tax: Applied via tables and coefficients, resulting in outdated assessments.
Reforms Urged: Harmonize individual vs. legal person taxation, expand municipal autonomy, and integrate national and local cadasters.

Chapter III: Proposed Property Tax Reforms for Romania
Combining Land and Buildings: Key recommendation includes merging land and building taxes into a single valuation unit.
Market Value Transition: Strongly advocated to reflect modern property markets.
Administrative Enhancements: Proposed for CAMA systems and grid-based declarations.

Chapter IV: Revenue Efficiency and Data Collection
Tax-to-GDP Ratio: Below peer countries; significant scope to raise buoyancy via international model implementation.
Data Integration: Establish shared cadastral and sales registers to support value-based tax systems.
Recommendations: Adopt self-declaration with progressivity, develop granular reporting on exemptions and revenue losses.

Key Recommendations (Summary):

1. Merge land and building taxes for both residential and non-residential units.
2. Transition to a market value base by 2030, calibrated annually using market data.
3. Enhance CAMA systems and sales price registers to support value-based taxation.
4. Implement a self-declaration value banding system to simplify taxpayer interfaces and administration at local levels.

Report Prepared By:
Martin Grote / William McCluskey
Fiscal Affairs Department, IMF
Washington, D.C.

SIGNATURE
[Place for signature omitted]

Index of Tables and References Not Extracted  
CONTENTS, PREFACE, ETC.