Romania's Progress In Electronic Commerce – After Accession On January 2007
Romania has the seventh largest population and the ninth largest territory in the European Union (EU). Beginning in late 1989, Romania actively followed a policy of expanding relations with the EU and United States. The Romanian government actively encouraged projects for upgrading the communications infrastructure and that would allow for increased Internet access, and to this end, issued special regulations to implement a series of government projects that laid a greater emphasis on e-commerce.
U.S firms are well represented in the Romanian ICT market, particularly in the IT sub-sector. Romanian imports of PCs, network interfaces and other communication interfaces, as well as of multimedia equipment and software for advanced IT applications would derive primarily from U.S. suppliers. In addition, there is widespread government-supported implementation of large IT projects as the development of information systems for public administration at both local and national levels (e.g., ID card system, integrated tax collection system, integrated health insurance information system) and an expansion of e-government and e-commerce.
What is the significance of the amendment of Law No. 365/2002 on electronic commerce in Romania? Law No. 365/2002 provides the legal framework for e-commerce and it relevant concepts like electronic messaging or exchange of data over the Internet. This law establishes who could start an e-business registered in Romania. Further, certain taxation principles are summarized under this law, and this law regulates other pertinent issues, with the overall goal of meeting EU recommendations. Electronic transactions that involve software applications are exempted from taxation, whilst any other material products which are imported or locally manufactured are subjected usually to the applicable tax rules of Romania.
Law No. 365/2002 concerning electronic commerce has been amended by Law No. 121/2006 with a view to correspond the Romanian legislation with Directive 2003/31/EC on certain legal aspects of information society services particularly e-commerce in the internal market. Nonetheless, the amendments carried out in Law 365/2002 are aimed chiefly at amending and clarifying the expressions used.
What is the significance of the Information Technology sector on e-commerce in Romania?
The IT sector is one of the active mechanisms of Romania’s economy and receives preference and interest from the Romanian government. IT has experienced significant development offering the latest technologies in many areas. The prominent user of IT is the Romanian government which makes up about one-third of Gross Domestic Product. The IT sector has implemented some of the major IT projects in the country which contains integrated systems for tax collection and National House of Health Insurance and various e-government and e-commerce projects. In 2001, Romanian government also opened a five year multi-million dollar project to provide 2,500 schools with computer laboratories and Internet access.
The Romanian government supports IT projects for the development of expansion of electronic government and electronic commerce.
What are the difficulties faced by Romania in the development of e-commerce?
A number of internal problems hamper in the development of e-commerce in Romania. For example, the Romanian banking system has not yet developed an effective system for electronic inter-bank payment clearing. Moreover, certain banks in Romania are not keen to develop a system to permit on-line payments via credit cards issued by other banks due to the low commission that they gain on such payments and the difficulties related to authentication of cards in real time. Notwithstanding, there are some banks (for example, BancPost) that have announced that they would provide an e-commerce service wherein companies interested could implement a computer system.
Furthermore, the Internet access rate is low in Romania and there is a limited usage of cards for on-line shopping, both factors that provide further disincentive for banks to develop effective e-commerce mechanisms.
Also, Romanian users and the companies show little or no trust in an e-commerce system, which could be due to the lack of information in the said field. In many cases, banks do not provide advice or in certain cases even prohibit the usage of issued credit or debit cards on the Internet, owing to qualms connected with data security.
In what ways is the tax system in Romania improving with respect to the collection of VAT?
Romania has enhanced its tax system to bring it closer to EU standards. Notwithstanding, improved efforts are required to enhance the collection of Value Added Tax (VAT) and to augment the collection of direct taxes. In January 2002, a new law on excise duties was entered into force in Romania, and in June 2002, a combined law on VAT was implemented. Romania also committed to modernize its tax administration and to augment its revenue collection system. However, no progress was noted by the EU in the area of administrative cooperation and mutual assistance, (an area where urgent action was requested in October 2005 by EU) to address the slow progress of implementation of the IT interoperability systems for tax collection, in particular VAT and excise duties. This has, in turn, led to progress in tax compliance by Romanian taxpayers.
The tax collection system in Romania experienced a decline in recent years and taxes contribute only 30% of the Romanian government’s budget, though control procedures for tax administration have been improved now. Romania’s taxation system experienced development in 2005 by eradicating a number of VAT exemptions contrary with the total body of EU law accumulated till date.
