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Understanding the Need for Income Tax Incentives. A Case Study on the It Sector in Romania

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  • Popescu-Predulescu Raluca-Andreea

    (Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

In 2023, the Romanian Government decided on the reduction and alignment of tax incentives for employees in the IT, construction, agriculture and food industry sectors. This paper aims to analyze the impact on these activity fields, with a focus on the IT sector. For this purpose, indicators such as number of employees, percentage in the total GDP and labor productivity were considered relevant and the data was processed using the regression analysis. Thus, the implementation of fiscal facilities had an overall positive impact on all industries in terms of employment, but not necessarily as a percentage of GDP. A strong, direct link between the increase in the mean salary in the IT industry and number of employees, labor productivity and percentage of GDP was determined, with a coefficient of multiple determination of over 90% for all three regression analyses. The elimination of benefits for the employees working in IT might have a negative impact on the sector which has become a main strategic resource for Romania, mainly because the possibility of working remotely can make companies easily relocate their IT departments.

Suggested Citation

  • Popescu-Predulescu Raluca-Andreea, 2024. "Understanding the Need for Income Tax Incentives. A Case Study on the It Sector in Romania," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 583-594.
    • Handle: RePEc:vrs:poicbe:v:18:y:2024:i:1:p:583-594:n:1011
    DOI: 10.2478/picbe-2024-0050
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