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Driving Changes in the Romania Fiscal Code
On 7 June 2012, the Official Gazette (384) published Ordinance amends to Law 571/2003 regarding the Fiscal Code regulating a number of financial / fiscal measures. Most of the amendments will be applicable from 1 July 2012. Taxand Romania considers these changes and how they are likely to affect taxpayers in Romania.
Of these changes to the Fiscal Code, the most important changes to note are as follows:
- Introduction of specific rules regarding deductibility of provisions / adjustments for the depreciation of non-performing receivables that have been taken over (by unrelated parties) from the banking sector, and are within the limit of the difference between the value of the receivable and the purchase price paid to the transferor.
- Limitation to 50% of the right to deduct the expenses related to motor vehicles (i.e. gas, repairs, maintenances) that are not entirely used for business purposes. Depreciation expenses are not included in the above limitation.
- Limitation to 50% of the right to deduct VAT on purchase, intra-community acquisition, importation, hire or leasing of motor vehicles, as well as VAT charged on expenditure related to those vehicles, where the vehicle is not used exclusively for business purposes.
- Increase of the annual threshold for mandatory registration for VAT purposes to EUR 65,000, computed at the conversion rate on the day of Romania's accession to the European Union - 1 January 2007 (i.e RON 220,000).
- Specific procedures introduced with respect to ex-officio VAT de-registration
Taxpayers need to be aware of the new deductibility requirements for both corporate income tax and VAT purposes with respect to motor vehicles, as it may mean that a change in their internal policies regarding such expenses (and the private use of company cars) is required. Taxpayers should also pay attention to the ex-officio VAT de-registration procedures as this area is expected to be highly scrutinised in the near future.
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