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What Transfer Pricing Changes Hold for Taxpayer
Important changes in the transfer pricing area brought by a Government Ordinance for amending and supplementing an earlier ordinance regarding the Fiscal Procedure Code, was published in Official Gazette of 30 January 2012. The ordinance affects the procedure for avoiding double taxation between Romanian related parties. Taxand Romania considers the new ordinance and how its features will affect taxpayers in Romania.
GO 2/2012 introduces the procedure for eliminating the double taxation between Romanian related parties. The double taxation is defined as being the situation in which the same taxable income/profit is taxed at two or more Romanian related parties performing transactions with each other. In case such an adjustment of the income or expense of one of the related parties is made by the competent tax authority administrating the liabilities of the respective person, this is also 'opposable' to the competent tax authority administrating the liabilities of the other related party.
The adjustment is decided based on an adjustment decision which will represent the base for issuance of a tax decision or of a decision for not modifying the taxable base. The adjustment decision is communicated to the taxpayer for which the adjustment was performed, to the other related party involved, as well as to the tax authority administrating the liabilities of the other related party.
It is worth noting that the adjustment is opposable only if the adjustment decision is definitive in the system of administrative and juridical means of appeal.
With the view to eliminate the double taxation (resulted from the adjustment of the income or expense), the other related party may correct the tax return related to the tax period for which the respective transaction was performed, in accordance with the adjustment decision.
Through the amendments brought to the Fiscal Procedure Code, the possibility of a Romanian resident taxpayer was introduced. One thing to consider is that taxation in a contracting state with which Romania has concluded a convention for avoiding the double taxation is not compliant with the provisions of the respective convention, to request the National Agency for Tax Administration ("ANAF") to initiate the amicable settlement procedure.
ANAF can also initiate the amicable settlement procedure in case the competent authority from the state with which Romania has concluded a convention for avoiding the double taxation requests it.
Your Taxand contacts for further queries are:
T. +40 21 316 06 45
T. +40 21 316 06 46