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12 April 2005 Soft21.ro Seminar Bucharest, Romania Jerry M. Striplin, CHF International

Enterprise Development Strengthening Program, Competitiveness Program- Romania’s ICT Sector - EU ACCESSION The Role of ICT, Industry Leaders and Available Resources . 12 April 2005 Soft21.ro Seminar Bucharest, Romania Jerry M. Striplin, CHF International. The Challenge.

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12 April 2005 Soft21.ro Seminar Bucharest, Romania Jerry M. Striplin, CHF International

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  1. Enterprise Development Strengthening Program,Competitiveness Program- Romania’s ICT Sector-EU ACCESSIONThe Role of ICT, Industry Leaders andAvailable Resources 12 April 2005 Soft21.ro Seminar Bucharest, Romania Jerry M. Striplin, CHF International

  2. The Challenge • Determine what role ICT plays in the key EU objectives and to be proactive… • Restructuring / Downsizing of old industries • Improving investor climate for new business and SMEs • Modernize …The educational System, Technical Training and IT environment

  3. Primary EU Objectives • Homogenous Regulatory Systems • Common External Tariff • Beneficial to exporters and investors • Transparency Requirements • Duty Free Access to Products • Protection of IP Where and How should ICT play it’s role?

  4. EU FUNDS

  5. One of the Key ChallengesVAT • Services are not subject to import duties. • In the software and IT services industry, the following general rule applies: VAT is paid in the country where the service is actually performed. • This means that service providers from developing countries have a competitive advantage compared to service providers in the EU. At the moment, some discussions are going on within the EU to change this rule. • VAT has to be paid on digital goods. • Computer software and IT services are services, so they are not submitted to import duties. • VAT taxes and outsourcing are a hot issue in the EU. VAT is a tax, levied by the individual member countries in the European Union. It is added to the price of products and services and will therefore influence the price consumers and companies have to pay. These VAT-rates differ per EU-country

  6. One of the Key ChallengesVAT Country Standard Rate % Austria 20 Belgium 21 Cyprus 15 Czech Republic 19 Denmark 25 Estonia 18 Germany 16 Greece 18 Spain 16 France 19.6 Hungary 25 Ireland 21 Italy 18 Lithuania 18 Netherlands 19 Poland 22 Portugal 19 Finland 22 Slovak Republic 19 Slovenia 20 Sweden 25 UK 17.5

  7. One of the Key ChallengesVAT In the software and IT services industry, the following general rule applies: VAT is paid in the country where the service is actually performed . Example 1- UK company that outsourced the helpdesk activities to a local UK company should pay VAT, Example 2- UK company that outsourcers the helpdesk activities to a service provider in India, does not have to pay VAY. The rules within India apply for the service provider with regards to VAT. This means that service providers from developing countries have a competitive advantage compared to service providers in the EU. At the moment, some discussions are going on within the EU to change this rule

  8. One of the Key ChallengesVAT • Electronic Services • In 2002, the Council of the EU adopted a VAT directive containing a regulation on the levy of VAT with regard to electronic services. These so called “digital goods” include: • Broadcasting • Web-hosting • Distance Maintenance • Software • Images • Databases • News Services • Music, films and games • Online gambling • Distant learning

  9. One of the Key ChallengesVAT

  10. ONE ADDITIONAL THOUGHTAs government and industry shifts to comply with EU Regulations …There will be opportunities for significant FDI.It is the main task of industry leaders and associations to keep the money within the country

  11. ATTRACT AND KEEP THE “INWARD INVESTMENTS” IN THE COUNTRY • BY CREATING A STRONG INTERNAL DELIVERY AND EXPORT CAPABILITY • EXPORT • REGION, EUROPE • ASIA, US • ATTRACT INWARD • INVESTMENT - IMPORT • $ BUSINESS 1-ON-1 INVESTMENTS • $ PRIVITIZATION PROGRAMS • PARTNER TO EXPORT • EXPERTISE, SOLUTIONS, • PRODUCTS OR SERVICES • THROUGH… • PROVEN SPECIFIC EXPERTISE • TECHNICAL • BUSINESS • REGIONAL • STRONG PARTNER RELATIONSHIP • ATTRACT AND KEEP $$ • INVESTMENTS IN THE • COUNTRY THROUGH… • MARKET KNOWLEDGE • SPECIFIC EXPERTISE • TECHNICAL • BUSINESS • REGIONAL • LEADERSHIP • CERTIFICATION • PARTNERING SKILLS • ROMANIAN • COMPANIES

  12. Enterprise Development Strengthening Program,Competitiveness Program- Romania’s ICT Sector-EU ACCESSION Thank you Jerry M. Striplin, CHF International

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