Corporate Tax 2010 - BMR Advisors

Pachiu & Associates
Romania
2009 a similar minimum tax regime became applicable to all
Romanian companies as well as to the permanent establishments of
foreign companies in Romania. In this regard, all Romanian
companies shall pay a minimum fixed amount of tax whenever such
minimum fixed amount of tax has a higher value than the value of
the 16% profit tax, e.g. in case of a company income anywhere
between RON 0 and RON 52,000 (approx. EUR 12,000) then the
company would have to pay the higher amount between the 16%
profit tax and the minimum fixed income tax of RON 2,200
(approx. EUR 500). The minimum fixed amount of tax payable by
a tax payer is established by the Fiscal Code based on the amount
of income obtained by the tax payer during the fiscal exercise to
which it applies. A particular regime of taxation is established for
so-called “micro-enterprises”. Companies which qualify as a
“micro-enterprise” may elect to pay income tax instead of profit
tax. Such income tax is 3% in 2009, calculated on all income
generated during a fiscal year. Generally, a company would qualify
as “micro-enterprise” if (i) it has between 1 and 9 employees, (ii) it
generates (or, for newly established companies, it is expected to
generate) an yearly income of maximum EUR 100,000, (iii) more
than 50% of its income is derived from activities other than
management and consultancy, and (iv) the company’s share capital
is not held by the State, local authorities or public institutions. If a
“micro-enterprise” failed to meet one of the criteria mentioned
above during a year, it will become a profit tax payer at the start of
the next year. Companies that invest more than EUR 500,000 may
benefit from tax exemptions for land and buildings, for a period of
up to 5 years, according to the decision of local authorities.
Representative offices of foreign companies in Romania are subject
to a flat tax of EUR 4,000 per annum (in RON equivalent),
regardless of their income during the fiscal year.
4.5 Are there any tax grouping rules Do these allow for relief
in Romania for losses of overseas subsidiaries
The Romanian legislation gives affiliated companies (the parent
company and its subsidiaries) the possibility of preparing a
consolidated annual report at group level. However, there are no
rules which would enable the consolidation of profit and losses of a
Romanian subsidiary with the profit and losses of its foreign parent
company. Group trading losses and gains may be offset under
certain conditions during corporate restructuring (i.e. mergers and
split-offs). For VAT purposes, under certain conditions, Romanian
legal entities liable to VAT, which are linked together by financial,
economic and organisational aspects, may be regarded as a fiscal
group.
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
The regular tax rate on gross dividends paid by a Romanian
company to another Romanian company is 10% and has to be
withheld by the company that is paying the dividends.
Undistributed profits are subject to corporate tax, but may benefit
from certain exemptions, if incorporated as a mandatory reserve.
Profits apportioned for the establishment of the mandatory reserves
are fully deductible. The current level of mandatory reserve is 20%
of the amount of subscribed and paid-in capital. As of 2009,
dividends paid by a Romanian company to another Romanian
company are tax exempted, provided that the beneficiary of the
dividends holds at least 10% of the share capital of the dividend
payer for at least a 2-year period ending at the dividends payment
date.
Romania
4.2 When is that tax generally payable
The general rule set forth by the Fiscal Code is that taxpayers have
to pay profit tax on a quarterly basis, until the 25th, at the latest, of
the month following the quarter for when the tax was due. As of 1
January 2007, Romanian banks and branches of foreign banks have
to pay profit tax in anticipation for each quarter of the year. Starting
in 2010, all the taxpayers will apply the profit tax system with
advance payment made on a quarterly basis. The profit tax’s
anticipated value shall be computed by taking into account the
inflation rate established for the year when the profit tax is paid.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Property taxes (e.g. land and buildings) are levied by local
authorities based on the declared value of the immovable, the
location of the immovable and on the square metres.
4.8 Are there any local taxes not dealt with in answers to
other questions
4.3 What is the tax base for that tax (profits pursuant to
commercial accounts subject to adjustments; other tax
base)
Taxable profit of a company is generally computed as the difference
between the revenues derived from any source and the expenses
incurred in obtaining such taxable revenues during the fiscal year,
adjusted for tax purposes by deducting non-taxable revenues and
adding non-deductible expenses.
4.4 If it otherwise differs from the profit shown in commercial
accounts, what are the main other differences
Subject to the conditions presented under question 4.3, profit shown
in commercial accounts may be different subject to the applicability
of accounting rules regarding losses, accruals and other restrictions
imposed by Romanian accounting standards.
ICLG TO: CORPORATE TAX 2010
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As a principle, local taxes are established by the local authorities on
a yearly basis, within the limits provided by the Fiscal Code. The
Fiscal Code provides for the following local taxes:
Tax on means of transportation, such as cars, buses, trucks,
tractors, motorcycles, boats, yachts, etc.
Tax for issuing of certificates, approvals and authorisations
due to be paid prior to the issuing of such documents.
Tax for advertising and publicity services, paid by the
beneficiaries of such services at rates of 1% up to 3% from
the value of such services, as determined by the Local
Council. The tax is not due for advertisements in the written
and audio-visual media.
Tax on entertainment activities, due for artistic shows, sports
competitions and the like. The value of the tax is 2% or 5%
of the income, subject to the entertaining activity. There are
special rules for determining the taxes for discotheques or
video saloons.
Tax for hotel accommodation. The value of the hotel
accommodation tax is determined by the Local Council, and
may vary between 0.5% and 5% of the accommodation fee.
The tax must be paid for the entire accommodation period,
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