On 10 January 2018, a Draft of Government Decision for the approving and completing the methodological norms for applying the Law 227/2015 regarding the Tax Code was published on the website of the Ministry of Finance. A series of modifications were proposed regarding:
Corporate income tax
Tax on income derived by micro-enterprise
Tax on foreign representative offices incorporated in Romania
Income tax
Mandatory Social contributions
Excise duties
We have summarized the most important modifications proposed below:
Corporate Income Tax
Only 30% of the value of the receivables sold can be deducted, irrespective if their value is charged as an expense or not. Also, to the extent that they are not accounted as income, the write-off of previously deducted provisions, as well as the assignment price of receivables, shall be considered elements similar to income.
Clarifications are provided regarding the method of calculating the tax deductible limit for exceeding borrowing costs, which replace the old limits on the deductibility of interest expense applicable until 31 December 2017.
Tax on income derived by micro-enterprises
The norms were aligned to the new provisions regarding the income derived by micro-enterprises included in the Tax Code applicable from 1 January 2018. For this purpose, among others, references to income from consultancy and management, as well as to legal entities operating in the banking, insurance, capital markets, etc., are eliminated as these conditions are no longer relevant for the classification in the system of taxation on micro-enterprise income as of 1 January 2018.
Tax on foreign representative offices incorporated in Romania
The provisions regarding the manner to establish the tax for foreign representative offices which are established / abolished during the year were eliminated from the norms, as a result of taking over these provisions in the Tax Code.
Income tax
The Norms are correlated with the new provisions regarding the calculation method of the tax base and the decrease of the income tax rate from 16% to 10% for income deriving from independent activities, salaries and salary assimilated income, rent, investments, pensions, agricultural activities, forestry and aquaculture, awards and from other sources, and from 10% to 7% in the case of anticipated tax payments applicable to income derived from intellectual property rights.Clarifications are brought regarding the non-taxable ceiling of 450.000 RON for the transfer of several real estate properties from the personal patrimony, through a single legal act.
Social Contributions
The Norms are updated according to the new Tax Code provisions regarding social contributions, applicable starting 1 January 2018, while the distinct chapters allocated to unemployment contributions, contributions for medical leave and health fund contributions, contributions to the work accidents and occupational diseases fund and the contribution to the Salary Debts Guarantee Fund are being repealed and a new chapter is introduced regarding the Work Insurance Contribution.As novelty, examples are brought regarding the assessment of income earned in 2017 by individuals from independent activities, agricultural activities, forestry and aquaculture, associations with legal persons, rent, investments and other sources, within the minimum ceiling of 12 minimum gross national wages, applicable as of January 2018, for establishing the 2018 health insurance contribution, within the framework set by the new social contributions system.
Excise duties
The Methodological Norms are aligned with the provisions of the Tax Code regarding the determination of the competent authorities that will perform the authorization of tax warehouses, registered consignees, registered consignors and registered importers. Thus, this authorization will be performed by the territorial tax authority. Also, economic operators which extract coals or produce coke, or who import or perform intra-Community acquisition of these types of products, and also producers, distributors or redistributors of electric energy or natural gas will be required to register at the territorial fiscal authorities. The formula used for the complete denaturing of ethyl alcohol was modified.
The methods and conditions for the restitution of excise duties paid to the Romanian State Budget were determined, for products of heated tobacco manufactured in Romania and subject to non-harmonized excise duties, but that are the object of an intra-Community supply or export.
