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Government Amends Approach to Profit Tax


Recent amendments and completions have been brought to the Methodological Norms for application of the Fiscal Code by Government Decision. These amendments cover Profits Tax, Income Tax, Withholding Tax, VAT, Excise and other Special Taxes, Local Taxes and Mandatory Social Contributions. Taxand Romania discusses these changes in detail.

Profits Tax
Expenses with write-off of receivables, as a result of application of an eorganisation plan approved and confirmed through a court decision, are onsidered deductible for corporate income tax purposes.

As regards the 50% deductibility threshold for expenses related to vehicles not used exclusively for business purposes, with a maximum authorized total weight below 3,500 kg and with no more than 9 passenger seats, including the driver's seat, the new provisions clarify that the deductibility rules, the terms and expressions used, as well as the conditions under which a vehicle is considered to be used exclusively for business purposes are those provided under 451.

According to the new provisions of the Methodological Norms, full deduction of expenses related to vehicles used exclusively for business purposes is allowed based on justifying documents and roadmaps which should contain at least information referring to the type of vehicle used, place and purpose of travel, driven kilometres and fuel consumption per kilometre.

Furthermore, clarifications are brought with respect to expenses directly attributable to vehicles, subject to the deductibility limitation, including expenses registered during a leasing agreement, such as local taxes, mandatory vehicle insurance, periodical technical inspections, road tax, rent, non-deductible VAT, interests, commissions, exchange rate differences, etc.

The conditions to be fulfilled for the deduction of expenses related to provisions/adjustments for depreciation of receivables undertaken from credit institutions are clarified. Thus, according to the new rules, such receivables are included in the transferee's taxable income if the latter records the difference between the value of the receivable and the amount to be paid to the transferor as an income.

Taxand Romania looks in greater depth at the additional governmental amendments including Withholding Tax

Taxand's Take

It is important to note these government amendments to approaches, across all of the above tax areas, to ensure compliance is maintained after the amendments are implemented.

Your Taxand contact for further queries is:
Angela Rosca
T. +40 21 316 0645
E. Angela.Rosca@taxhouse

Taxand's Take Author