Proceedings

(Slemrod and Blumenthal, 1996). In some countries (including Romania), the
limitation of this kind of costs for specific companies and the simplification of the
taxation procedures resulted into the replacement of profit tax by income tax, the
latter being much easier to calculate and follow (for certain companies with revenues
of less than 100,000 euros). We may even rest our argument on a sort of significance
threshold principle with fiscal applications: the profit tax is calculated only for
companies that are large enough.
DISCUSSION AND CONCLUSIONS
The relation between company accounting and company taxation has been is a
perpetual evolution and its implications are to be identified especially in the profit tax
area, and also when calculating and declaring other taxes (value added tax, local taxes
and charges). When trying to detect the difference or superposition between
accounting and taxation, it is useful to examine the manner in which accounting
principles are fiscally recognized. We thus looked at the nine principles explicitly
listed by the OMPF 3055/2009 and we tried to identify some of their fiscal
implications, focusing especially on the instances when tax regulations differ from
accounting regulations. The result was more or less numerous fiscal consequences for
each of the nine principles.
Therefore, as concerns the going concern, the fiscal consequences occur especially
when this continuity is interrupted. Or, a lack of continuity may mean winding-up,
which is the end of the life of an entity. If, after the payment of the debts there is still
some money left, then profit tax and/or income tax is calculated for the winding-up
revenue, that is for the remaining equity capital structures. The taxation of equity
capital does not necessarily result from the differences found between the accounting
and fiscal regulations, but it is rather a natural consequence of the taxation treatments
applied to those equity capital components on their constitution.
As for method permanence, we find fiscal implications and we comment upon the
method change effects. For instance, fiscal regulations accept changes to the stock
valuation method, if these changes occur when passing from one financial year to the
next. Another method change with considerable fiscal implications is the passing from
the depreciated cost model to the fair value model. No differences between the two
sets of records occur to the extent this revaluation is fiscally recognized. As concerns
accounting estimate changes, accounting regulations have become slightly less rigid
than fiscal regulations, which may help distinguish between the two. Accounting
method changes and error corrections are also the object of the principle of balance
sheet intangibility.
Accounting conservatism is one of the principles that have important outcomes for the
accounting-taxation relation. For simplicity reasons, we may even say that the
Romanian taxation body does not fully accept the consequences of the accounting
prudence rule, thus seriously limiting the fiscal recognition of the expenditure
undertaken further to the application of this principle or simply deferring their
recognition. For instance, the tax deduction of expenditure undertaken for provisions
and depreciation adjustments is limited and conditioned rather strictly.
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