Business Guide to Romania* - Bayern - Europa

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Chapter 10 - Indirect Taxation Taxable Amount The VAT payers are allowed to adjust the output VAT if the counter value of the goods or services supplied cannot be cashed because of the declared bankruptcy of the client. The initial output VAT can also be adjusted for price decreases or increases and for return of goods. Non-deductible Input VAT VAT related to goods and services that are not purchased for the purpose of business is not deductible. If the VAT payer performs both taxable and exempt operations, the 'input VAT' can be recovered based on the following criteria: ■ the input VAT directly attributable to VAT-able transactions is fully deductible; ■ the input VAT directly attributable to exempt transactions is fully non-deductible; ■ the input VAT related to both VAT-able and exempt transactions is subject to pro rate. VAT Compliance Taxable persons must keep complete and detailed records for the computation of VAT liability. As a general rule, the fiscal period is the calendar month but for VAT payers with previous year-end turnover did not exceed EUR 100,000, the fiscal period is the calendar quarter. VAT returns should be submitted to the tax authorities by the 25th of the month following the fiscal period; the VAT is due by the same date. The VAT return should be submitted using an electronic carrier (floppy disk). Taxable persons not registered as VAT payers are required to pay VAT and to submit a special statement on services received from non-residents, which have the deemed place of supply in Romania. These obligations must be fulfilled by the 25th of the month following the one when the services were supplied. If a company is in a VAT reimbursable position, it must tick the VAT refund box on the VAT return to request the refund. Alternatively, the balance can be carried forward against VAT liabilities reported in future returns. The refund requests must be processed by the tax office within 45 days from submission. Large tax payers (as classified by the law) are entitled to obtain a refund on request, with a subsequent inspection (i.e. a "fast refund"). Other taxpayers may be entitled to a "fast 48 PricewaterhouseCoopers - Business Guide to Romania 2005 refund" (i.e. without prior inspection) but only after a complex risk analysis. If the VAT is not reimbursed within the legal term (i.e. 45 days) taxable persons would be entitled to ask for interest, currently standing at 0.06% per delay. 10.2 Customs and International Trade Customs Duties The Romanian Customs Import Tariff is based on the Harmonised System for the denomination and classification of goods, and is in line with the Combined Nomenclature adopted by EU member states (eight-digit code). Customs duties are expressed as a percentage applied to the customs value - i.e. they are ad valorem taxes. With the exception of agricultural and food products, which have a specific tariff regime, the rates of customs duties vary from 0% to 30% depending on the type and characteristics of the goods. Examples of rates are given in Appendix IX. Preferential customs duty rates apply for goods originating in EU, EFTA and CEFTA countries, as well as with countries with which Romania has signed bilateral free trade agreements (Albania, Bosnia&Herzegovina, Israel, Macedonia, Moldova, Serbia&Montenegro and Turkey). The trend is heading towards the elimination of customs duties for goods originating in these trade blocs or countries. However, in order to benefit from preferential customs duties, importers have to present at the customs office a valid proof of preferential origin. Also, preferential customs duty rates apply for certain goods originating in developing countries that are members of P16 and GSTP. Temporary Import Relief Inward Processing Regime (IPR): If raw materials, components or accessories are imported into Romania for processing and subsequent re-export of the finished products, customs duty relief is available through IPR. Processing covers the full assembling and manufacturing process. Under this regime importers can opt either for a duty suspension system (no payment is due for the import duties, but generally, the customs debt has to be guaranteed) or for a duty draw-back system (the import duties are to be paid at the import date, but the customs duties are reimbursed when the finished products are reexported). Also, an exemption from the obligation to
guarantee import duties could be obtained under the first option (i.e. the IPR with duty suspension system). Outward Processing Regime (OPR): The OPR customs regime allows for the export of raw materials to be processed abroad and subsequent re-import of the end products with partial or full customs duty relief. This regime also applies for goods or equipment sent abroad for repair and/or modernisation. Bonded Warehouse Regime (BWH): The BWH is a customs regime allowing for temporary suspension of payment of import duties on foreign goods stored in warehouses until the date they are taken out of the warehouse. Both goods owned by foreign entities, and goods purchased initially by the Romanian titleholder of the BWH authorisation, can be placed under the BWH customs regime. If the ownership over the foreign goods remains with a foreign entity when the goods are introduced into the BWH, and subsequently the goods are sold to Romanian customers, the customers will become importers responsible for customs import formalities, and liable for the related import duties. If the goods are sold by the foreign owner to customers outside Romania and reexported, no import duties are due in Romania. If the Romanian titleholder of the BWH authorisation becomes the owner of foreign goods introduced into the BWH, he has to perform the customs import formalities and pay the related import duties before removing the goods from the BWH. No import duties are due however if the goods placed initially in a bonded warehouse are placed under other suspensive customs regimes (IPR, OPR, temporary admission, transit, etc). Generally, a guarantee is requested by the customs authority in order to assure the effective payment of import customs duties. However, this is not compulsory for certain products, as an exoneration in this respect could be obtained based on specific documentation. The BWH regime also allows for storage of Romanian goods intended for export, until they are effectively taken out of the country. Temporary Admission Regime (TA): Goods that are introduced into Romania in order to be temporarily used and later returned to the foreign owner are granted total or partial relief from customs import duties. Total relief means no payment or guarantees are requested by the customs authorities in connection with the customs import duties (i.e. customs duties, VAT and excise duties, if applicable). Partial relief means the customs authorities will levy a monthly portion of 3% of the customs duty and the importer should provide a guarantee covering the difference. Customs Duties Incentives Direct Investment Incentives As mentioned in Chapter 8, direct investments of at least USD 1 million are subject to customs duty exemption for specific new tangible and intangible goods imported as part of the investment. Examples of approved goods are listed in Appendix X. Goods contributed to share capital Import duties (i.e. customs duties, VAT and excise duties, if applicable) exemption applies to capital assets and equipment upon the transfer to Romania of a business activity that has ceased abroad, provided that certain conditions are fulfilled. Generally, the assets must have been effectively used for at least 12 months prior to the cessation of the activities in the country from which they have been transferred, and the assets have to be imported into Romania within 12 months from the cessation of the activity outside Romania. Leasing Regulations Chapter 10 - Indirect Taxation Details of the corporate and withholding tax implications of leasing are found in Chapter 8. Current assets introduced into Romania by Romanian lessees based on financial or operational leasing contracts concluded with foreign leasing companies are assigned, from a customs perspective, Temporary Admission customs regime with total import duty relief (including excise tax, if applicable), and, consequently, no payment or guarantees are requested by the customs authorities in connection with import duties. Romanian leasing companies benefit from import duties exemption on import of current assets based on leasing contracts concluded with Romanian beneficiaries. However, under both of these alternatives, the import duties become payable at the end of the leasing agreement, computed according to residual value. The leasing legislation provides, for import duty purposes, for a minimal residual value of 20% of the entry/acquisition value of the goods. Specific provisions apply in relation to the excise duties for leased cars - i.e. the taxable amount for excise duties is the entry value of the entry/acquisition value of the cars. The duration of the leasing contract should be at least one year and it cannot exceed seven years. PricewaterhouseCoopers - Business Guide to Romania 2005 49
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 and 36: Chapter 7 Accounting and Audit Requ
Page 37 and 38: Chapter 8 Taxation of Corporations
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: similar function, cinema tickets, a
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

Business Guide to Romania* - Bayern - Europa

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