Business Guide to Romania* - Bayern - Europa

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Chapter 7 - Accounting and Audit Requirements and Registration ■ Orders of the Ministry of Finance providing additional guidance on accounting and tax issues. Significant Accounting Differences Between RAR and IFRS Appendix V contains a table indicating some of the major differences between the practical application of RAR (i.e. OMF 306 and OMF 94 rules) and IFRS. These should be kept in mind when reading Romanian financial statements prepared under RAR. 7.2 Chart of Accounts Both OMF 94 and OMF 306 require the use of a Chart of Accounts. The principle underlying the Chart of Accounts is that all companies should record the same item in the same account, irrespective of the nature of their business. Accordingly the Chart of Accounts is a set of predefined account numbers and names that must be used by all companies. A brief summary of the Chart of Accounts for a commercial company under both OMF 94 and OMF 306 is given in Appendix V (note that the Chart of Accounts for banking institutions and non-profit organisations is different). 7.3 Audit Requirements Audits in Romania take place by legal requirement in accordance with the provisions of the Emergency Government Ordinance 75/1999 approved by Law 133/2002 (the Audit Law) and subsequently amended by Government Ordinance 67/2002 and Law 12/2003. The Government Ordinance 75/1999 was republished in 2003. Legally Required Audits Companies Subject to OMF 94 Companies applying the provisions of OMF 94 are required to submit to an audit by a member of the Romanian Chamber of Financial Auditors (‘the Chamber’). This body was created under Emergency Government Ordinance 75/1999, and is designed to comply with the requirements of the EU 8th Directive. The Chamber was created as part of a UK Government-funded project to improve accounting and auditing practices. Companies Subject to Romanian Accounting Regulations Joint Stock Companies (SAs) and Limited Liability Companies (SRLs) with more than 15 shareholders that 34 PricewaterhouseCoopers - Business Guide to Romania 2005 are not subject to OMF 94 must be audited by their appointed company 'censors' or financial auditors if the companies opt for having an external auditor. Censors are either individuals or companies appointed by the SA or SRL at the time of their registration as legal business entities. Their main responsibilities include: ■ Supervision of the administration of the company and ensuring that accounts and legal books are properly kept; ■ Ensuring that decisions taken by the General Meeting of Shareholders are properly implemented; ■ Ensuring that the company and its directors comply strictly with the law; ■ Ensuring that the end-of-year financial statements are prepared in accordance with the law. The auditing rules for companies that are not subject to OMF 94, or are neither an SA nor SRL included in the above category, are open to interpretation. Individuals or companies who are members of the professional Romanian Accountants Body (CECCAR) normally perform such audits. Auditing Standards for Legally Required Audits Audits performed by members of the Chamber of Auditors have to be performed in accordance with the Auditing Standards established by the Chamber, which are similar to International Standards on Auditing. A number of international accounting firms (including PricewaterhouseCoopers) are members of the Chamber. Audits performed by censors do not have to follow any particular framework. Securities Commission Requirements Companies subject to regulations on securities (all of which must be SAs) are required to appoint independent external auditors (individuals or audit firms) who are members of the Chamber. At least once a year, these companies must submit an auditor's report to the National Securities Commission. Accountants and Law Firms Details of major accounting and legal firms are provided in Appendix VI.
Chapter 8 Taxation of Corporations ■ Standard corporate tax rate of 16% ■ Quarterly reporting and payment (monthly for banks) ■ Dividend tax of 10% on dividents paid to resident legal persons and individuals ■ Micro-companies pay 3% of revenue earned ■ The fiscal year is the calendar year for all entities 8.1 Corporate Tax System Companies Romanian entities and foreign entities doing business in Romania are liable for corporate income tax (profit tax). The standard profit tax rate is 16%, applicable to both Romanian companies and to foreign companies operating through a permanent establishment in Romania. The profit tax liability due by nightclubs and gambling operations cannot be lower than 5% of the revenues obtained from such activities. Companies that have opted for the micro-company regime (annual turnover up to EUR 100,000 and between 1 and 9 employees) are taxed at 3% of revenue earned, up to and including the year in which they go beyond these criteria, payable each quarter, by the 25th of the month following the quarter for which the tax is paid. Dividends Dividend payments by a Romanian company to Romanian residents, individual or corporation shareholders are subject to 10% dividend tax. If the payments abroad are made towards a beneficiary resident in a country with which Romania has not concluded a Double Taxation Treaty, the dividend withholding tax is 15%. If the payments abroad are made to a beneficiary resident in a country with which Romania has concluded a Double Taxation Treaty and the beneficiary of the payment makes available a fiscal residence certificate, then the Romanian withholding tax rates applicable for residents or the rates stipulated in the Treaties would apply, whichever are more favourable. After Romania's accession to the EU, dividends paid by a Romanian company to another company (Romanian or within the EU) will not be taxed if the beneficiary holds at least 25% of the share capital of the Romanian company for a minimum period of 2 years that ends on the date when the dividends are paid. Accounting and Fiscal Depreciation The Fiscal Code makes an explicit distinction between accounting and fiscal depreciation. For fixed assets commissioned after 1 January 2004, fiscal depreciation is to be computed based on the rules set out by the Fiscal Code and deductibility will no longer depend on the level of depreciation recorded in the accounts. Accelerated or reducing balance depreciation methods may be used for determining the fiscal depreciation while the accounting depreciation method could be different (e.g. straight-line method). Companies are allowed to revalue their fixed assets at the end of each year. Revaluation is compulsory if the cumulative inflation rate exceeds 100% over the last three consecutive years. The respective inflation rates for the last three years were 17.8% (2002), 14.1% (2003) and 9.3% (2004). Therefore, for 2004 the cumulative inflation over the last three years did not exceed the 100% limit. The revaluation needs to be made on the basis of the inflation index set by the National Institute of Statistics, and on the market value established under the criteria stipulated by law. The Fiscal Code also states that the fiscal depreciation of fixed assets existing in the company's records as of 31 December 2003 will be computed considering the net book value of such assets at 31 December 2003 (i.e. including any revaluation recorded until that date) and by using the same depreciation methods as in the past periods. The revaluation recorded in the financial PricewaterhouseCoopers - Business Guide to Romania 2005 35
Page 1 and 2: Business Guide to Romania* 2005 Edi
Page 3 and 4: Contents Chapter Page 1. Romania: a
Page 5 and 6: ■ Unions 30 6.2 Working Condition
Page 7 and 8: ■ VAT Compliance 48 10.2 Customs
Page 9 and 10: Chapter 1 Romania: a Profile ■ Ro
Page 11 and 12: upgrades made by Moody's and Fitch
Page 13 and 14: All visitors to Romania require pas
Page 15 and 16: nearly one-third of Romania's banki
Page 17 and 18: Mortgages are created under authent
Page 19 and 20: allowance of 20% of the value of th
Page 21 and 22: Chapter 4 Banking, Finance and Insu
Page 23 and 24: ■ Taking deposits; ■ Making loa
Page 25 and 26: tried to bring more transparency an
Page 27 and 28: Chapter 5 Corporate and Business La
Page 29 and 30: EUR 25,000 by 31 December 2005). Pa
Page 31 and 32: Chapter 6 Labour Relations and Soci
Page 33 and 34: employment contract with an occupat
Page 35: Chapter 7 Accounting and Audit Requ
Page 39 and 40: exempt from paying profit tax throu
Page 41 and 42: ■ Other salary and/or similar exp
Page 43 and 44: - revenues obtained from management
Page 45 and 46: Income Subject to 16% Flat Tax Rate
Page 47 and 48: ■ Income from sale of movable and
Page 49 and 50: similar function, cinema tickets, a
Page 51 and 52: guarantee import duties could be ob
Page 53 and 54: are transported between tax warehou
Page 55 and 56: also stipulates the elements that s
Page 57 and 58: elationships with key contacts, inc
Page 59: Appendices
Page 62 and 63: Appendix II Appendix II Major Banks
Page 64 and 65: Appendix III Restaurants Phone ■
Page 66 and 67: Appendix IV 481- 482 Internal Settl
Page 68 and 69: Appendix VI Appendix VI Accountants
Page 70 and 71: Appendix VII (b) Appendix VII (b) W
Page 72 and 73: Appendix IX Appendix IX Customs Dut
Page 74: Appendix XI Appendix XI Excise Tax

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