The changes recently proposed by the Ministry of Public Finance (MPF) in relation to the Tax Code and the Tax Procedure Code were passed by the Romanian Government on November 16th, 2016; the Emergency Ordinance is to be published in the Official Gazette, but the Executive has not yet released any statement as to whether the proposed version of the legislative project has been adjusted. The project was initiated by MPF earlier this month, and its beneficiaries are both companies and individuals. The new provisions should be applied from January 1st, 2017.
The main proposed changes are:
1. Suspension of the submission of forms 392 and 393 for a few years
One of the major proposals put forth by MPF is the suspension until December 31st, 2019 of the obligation to file informative statements 392A and 392B. Specifically, these forms must be filled in and submitted to the IRS by taxpayers that may be subject to VAT or not, but have a turnover of less than RON 220,000. This rule will also be valid for form 393, which must be filed by VAT taxpayers that provide international passenger transport services.
Therefore, the administrative burden of taxpayers whose turnover is below RON 220,000 and those dealing with international passenger transport will be reduced.
2. Complete elimination of the Intra-Community Operators Register
Taxpayers that carry out intra-Community operations will no longer have to be included in the Intra-Community Operators Register, as this register will be removed from the Tax Code. Currently, taxpayers that intend to conduct such operations (e.g., intra-Community deliveries of goods or services) have to apply for registration in the Intra-Community Operators Register.
3. Provisions concerning measures applicable to taxpayers that recover their VAT number after it was cancelled by the tax authorities
Such taxpayers will invoice with VAT all the sales made while they had no VAT number, thus being able to recover from customers the tax they collected. For purchases related to sales made while they had their VAT number cancelled, taxpayers can deduct the VAT after reactivation, and their beneficiaries will be able to deduct the tax related to purchases made while the suppliers had their VAT number cancelled.
Also, expenses incurred by inactive taxpayers and their beneficiaries will be considered in determining the tax outcome regarding corporate tax at reactivation, either during the current tax year, or by correcting the corporate tax statement for the previous tax year.
4. Elimination of the time-limited application of tax exemption regarding reinvested profits
For the time being, tax exemption for reinvested profits is only valid until the last day of the current year. For this reason, in order to stimulate the economy and support investments, the Government intends to establish a permanent basis for this incentive. The exemption applies to profits invested in, for example, technological equipment, computers, peripheral equipment and software that are used in the business.
5. Reducing the minimum threshold for micro-enterprise taxation
Reducing the share capital threshold requested for company establishment, depending on which the tax regime for micro-enterprises is applicable or not, is another significant proposal included in the legislative proposal.
Specifically, the minimum threshold of EUR 25,000, from which one can opt for corporate tax, will be reduced to RON 45,000 (approximately EUR 10,000) so that only entities whose share capital is lower than the latter should apply for the micro-enterprise income tax. This measure will also be valid for already established taxpayers that increase their share capital to at least RON 45,000.
6. Finally, another measure will be encouraging citizens to use internet banking, mobile banking, payment terminals and ATMs. Specifically, public institutions will accept as evidence of payment documents that certify transactions made either over the counter or online.
Also, this measure refers to electronic data transmission to public institutions that have online applications for providing services. The receipt and any paid amounts are checked by the public institutions.