Changes in the Romanian tax legislation in light of international developments

During the Deloitte Tax & Legal annual conference organized last week Deloitte Romania and Reff & Associates specialists discussed together with their special guest, Mr. Dan Manolescu, Secretary of State in the Minister of Public Finance, the latest updates of the tax & legal framework, their future impact on the local business community as well as the challenges that Romanian companies are currently facing.

The event covered topics such as international tax trends and their impact on the Romanian system, new EU trends in VAT, as well as interactive sessions addressing specific industries (Retail and Manufacturing, Pharma) and issues concerning the local business community (business reorganization, legislative trends and recent court interpretations regarding the insolvency law, tax fraud investigations).  


The Tax & Legal annual conference is an important event for our team, which has been growing steadily in both number of professionals and business achievements. Over 150 participants, representatives of more than 100 Romanian top companies attended the event, proving once more the increased interest in the rapidly changing fiscal and legal framework,” said Dan Badin, Partner in Charge Deloitte Tax & Legal.


He also highlighted that “the recent legislative amendments in Romania generally follow the international trends: the exchange of information between countries in order to fight against tax evasion and tax avoidance, the increase in taxation through various methods (enlarging the taxable base, introduction of new taxes such as those in the energy field or the new construction tax, as well as an increase in tax rates, notably the impact of the VAT increase). To balance these changes, Romania must also adopt measures to support economic growth and fiscal competitiveness. Last year’s actions to increase fiscal incentives for research and development activities, as well as introducing the holding legislation starting in 2014, are important steps”, Badin said, adding that “measures to develop the labor market, such as a decrease in social contributions, are expected to follow. Moreover, the authorities should take more seriously the business community’s concern that a lack of predictability within the fiscal system dampens investors’ interest in the country”, he noted.


Mr. Dan Manolescu said that he is not anticipating tax quota increases for next year and he even referred to a possible decrease in the social insurance quota for mid-2014. With respect to the Tax Code, the Secretary of State hopes that its rewriting will be finalized next year, which would allow it to enter into force in 2015. Another topic addressed by Mr. Manolescu was the VAT collection system; he had few proposals to shift to the optional system, but no decision has so far been made at Government level. Concerning the recently introduced construction tax, the Secretary of State advises companies to carefully manage their fixed assets accounts to lessen the impact of this tax. Mr. Manolescu also mentioned that Romania follows the international approaches, i.e. at EU and OECD levels, to fight against tax avoidance and tax evasion.


Alexandru Reff, Partner Reff & Associates, member of Deloitte Legal, noted that “The stakes are increasing when it comes to taxation. The pressure to comply with fiscal obligations is not only related to the high costs of potential additional assessment but also to the risk that directors or management could be held personally liable if the manner in which the payment of some taxes or social security contributions was avoided would be viewed as tax evasion rather than tax optimization. The line between the two is sometimes more blurred than would be expected. This makes the input of a consultant or lawyer essential.


Another special guest at the conference, Benjamin Gohet, Tax Director, Deloitte France, discussed the international and French initiatives concerning the problems in the tax system as well as the fight against tax evasion. 


Pieter Wessel, Partner Deloitte Tax, added that “the expertise and experience of a country benefiting from an evolved tax system, best practice with respect to fiscal authorities are key aspects that any entrepreneur should have in mind.


The tax and legal team counts over 140 professional consultants and  is led by Dan Badin– Partner in Charge Tax& Legal, Alexandru Reff – Legal Partner, Pieter Wessel – Indirect Taxation Partner, Sorina Mardare – BPO Partner, Andrei Burz-Pinzaru – Legal Partner.