Business Guide to Romania* - Bayern - Europa

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Chapter 11 Fiscal Procedure Provided by David & Baias, correspondent law firm of PricewaterhouseCoopers in Romania ■ New principles introduced such as: the rule of good faith, the right of the taxpayer to express its point of view, the confidentiality of information ■ Tax registration within 30 days from the incorporation date ■ For 2005 the late payment penalties 0.5%/month and late payment interest 0.06 %/day A new Fiscal Procedure Code entered into force on 1 January 2004 that unifies former legislation regulating tax audits, collection of budget receivables, as well as legislation on tax returns, tax assessment and tax jurisdiction. It applies to taxes and duties payable both to the state budget and local budgets, as well as to custom duties and payables from contributions, fines and other amounts treated as revenues to the state budget or other budgets. The Romanian Government has also issued norms containing detailed legal provisions for the implementation of the Fiscal Procedure Code. The Romanian Parliament has also enacted a new law governing the procedure for challenging administrative acts (including those of the tax authorities), which entered into force at the beginning of 2005. 11.1 General Principles Several important principles governing the relations between taxpayers and tax authorities have been enacted. These principles are the rule of good faith, the right of the taxpayer to express its point of view, tax secrecy (confidentiality of information) and the active role of the tax authorities in advising taxpayers on the correct application of tax legislation. 52 PricewaterhouseCoopers - Business Guide to Romania 2005 The fiscal legislation is to be construed in a uniform and non-discriminatory manner. To this end, the Central Fiscal Commission has been established as the only entity empowered to issue official interpretations of the tax legislation. As a rule, revenues are subject to taxation regardless of whether they are generated by legal or illegal activities. Liability of Other Persons Shareholders, directors, managers and other persons may be held liable for the duties of the taxpayer under certain circumstances (e.g. persons provoking the insolvency of the debtor by transferring the ownership over the debtor's assets or hiding such assets; persons acquiring in bad faith the debtor's assets within three years of the debtor's insolvency). As a general rule, the liability of the shareholders may not extend beyond the value of their contribution to the share capital (except for the cases listed in this code). Rules Governing Evidence Specific rules apply insofar as burden of proof is concerned. Taxpayers should thus produce evidence sustaining the facts included in tax declarations, whilst tax authorities should base their tax decisions on a factual and legal perspective. Persons bound to provide relevant information to the tax authorities and persons who may refuse to provide information are also mentioned in the Fiscal Procedure Code. Special obligations are imposed on the banks that are required to communicate on a monthly basis data regarding the names of individuals opening or closing accounts. Fiscal Administrative Acts Specific rules apply to the preparation and serving of acts issued by the tax authorities to the taxpayers. The code
also stipulates the elements that should be included in the fiscal administrative acts. Fiscal Domicile The concept of fiscal domicile is defined, as applying to both individuals and legal persons. This concept is essential in defining both the tax jurisdiction and tax registration obligations. Tax Jurisdiction The deadline allowed for submitting objections against fiscal administrative acts is now 30 days. If the fiscal administrative act fails to meet certain formal requirements, the deadline is three months. The plaintiff is allowed to withdraw the complaint without losing the right to file a new complaint within the legal deadlines. If the taxpayer is not satisfied with the solution of the tax authorities, it may file a claim with the court within six months from the day the solution was announced. The deadline may be extended on serious grounds up to one year from the day the solution was issued. Other Rules Any request by the taxpayer must be processed and answered by the tax authorities within 45 days. Should the authorities fail to answer within this deadline the tax payer may file court claim for such a failure. 11.2 Specific Tax Procedures Tax Registration The categories of persons required to perform tax registration within 30 days from the date of incorporation. The form and contents of the tax registration applications are regulated. Tax Returns and Tax Assessment Another fundamental change is that penalties for failing to submit tax returns in due time (computed previously as a percentage of the due tax) have been eliminated. Chapter 11 - Fiscal Procedure The new form and contents of the tax returns, specifications in the tax assessment decisions and the limitation period applicable to the assessment of tax liabilities have also been established. The status of limitations for tax authorities assessing additional tax liabilities is five years as of 1 January of the year following the one when the taxable events occurred. Tax Audit The procedure for conducting tax audits is also regulated. The control minutes finalising the procedure have been replaced with tax audit reports, based on which the tax assessment is made. The tax audit report is communicated to the tax payer along with the tax assessment. Collection of Budgetary Receivables Detailed rules apply to the payment methods, payment deadlines, the applicable penalties and interests, the enforcement of budgetary receivables and complaints against the enforcement procedure. The off set between the taxpayer's receivables against the budget and the budgetary receivables prevails over restitution. The off set is allowed for liabilities to or from different budgets, provided that a certain off set order is observed. For 2005 the late payment penalties are 0.5%/month and late payment interest is 0.06%/day. The Government can establish the level of the late payment interest every year based on the reference interest rate published by the NBR. The status of limitations for collecting budgetary liabilities is five years from the year following the one when the right to collect the relevant liabilities had arose. PricewaterhouseCoopers - Business Guide to Romania 2005 53
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 and 50: similar function, cinema tickets, a
Page 51 and 52: guarantee import duties could be ob
Page 53: are transported between tax warehou
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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Business Guide to Romania* - Bayern - Europa

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