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Warning: The fiscal controls are intensifying, be ready!

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After it has opened many fronts in order to battle against the tax evasion this year – ghost companies which make frauds regarding the VAT, labor without contract, the huge fortunes and so on – the fiscal authority announces a new intensification of the fiscal controls in 2016. Needing over 10 billion lei in addition, in order to compensate the decrease of the budgeted revenues caused by the fiscal relaxation, and also to cover the increase in salaries from the public sector, the government relies heavily on the activity of the fiscal authority.

Contexpert recommends to all the contributors to verify again the financial and accounting situation and to reanalyze the risks associated to their business in the context of strengthening the controls. In this way, we mention that the fiscal inspections focused mainly on the economical substance of the transactions (the consequence is the cancellation of the right to deduct the expenses and, depending on the situation, the afferent VAT too), not declaring/declaring a lower amount of the revenues from wages and/or revenues having wage nature (controls made together with the Labor Inspection), intra community transactions, transfer pricing.

Attention! The results of this controls quantify themselves by establishing additional amounts representing taxes.

We present you essential aspects about the fiscal inspection and the antifraud control:

How does the inspection differ from an antifraud control?

The purpose of the fiscal inspection is to verify the legality and the compliance of the tax statements, the correctness and the accuracy of fulfilling the obligations, the compliance with the fiscal and accounting framework, the calculation of the tax base and of the differences on the payable fiscal obligations and on the related accessories.

There are two types of antifraud control: operative and unannounced or thematic. The operative and the unannounced one is a routine control, without a prior notice and the inspectors verify the compliance with the legal framework in order to prevent, discover and combat any acts and facts of tax evasion, fiscal fraud and custom fraud. The thematically control is performed according to a thematic control order in which are established the objectives to be verified, the companies that will be verified, the period that will be checked, the period in which the control will be performed and the moment when the control starts. The purpose is to ascertain, to analyze and to evaluate the specific fiscal risk of one or many economical activities.

On what focus the fiscal inspections?

• the economical substance of the transactions (according to the article 11 from the Fiscal Code)
• intragroup transactions
• transactions with off shore companies
• mismatch between the financial results and the taxes paid
• service contracts and license contracts
• benefit schemes for personnel
• fluctuations of the financial results (significant profit followed by loss and so on)
• losses in more than a three years period
• the absence of the fiscal statements in the last 12 months
• frequent rectifying statements
• not asking for the VAT reimbursement, although there exists the right to claim it
• to renounce at the VAT reimbursement after applying the request
• transactions with inactive companies
• acquisitions from companies which have no valid identification code

How should the fiscal inspections be conducted starting from 2016?

• the notice of the fiscal inspection will be communicated; it will contain the taxes that make the objective of the fiscal inspection and the verified period
• After 15 or 30 days (for the large contributors) the inspection will be initiated. However, there are situations in which the fiscal inspection can begin immediately after the notice will be communicated.

• The duration of the fiscal inspection should be of:

– 180 days for the large contributors and for the contributors/ payers who have secondary offices regardless of size;

– 90 days for the medium contributors;

– 45 days for the other contributors;

If the tax inspection is not completed in a period representing twice of the period mentioned above, it stops, without issuing a report and a tax decision. In this case, the fiscal authority can restart the inspection for that period and for those fiscal liabilities only once, only with the approval of the superior representative of the fiscal authority and only if the prescription period did not end.

• During the tax inspection, the taxpayer should be informed regarding the aspects found;

• Upon completion of the inspection it must be presented the draft report of the fiscal inspection;
• The taxpayer has the right to submit, in written, his point of view regarding the findings of the fiscal authority, within maximum 5 working days from the closing date of the tax inspection. In case of the large contributors, the deadline for the presentation of the point of view regarding the fiscal inspection is of maximum 7 working days. For justified reasons the deadline may be extended with the consent of the head of the fiscal inspection authority. (It is a decisive moment and you must give your full attention because it can influence the result of the fiscal inspection!)
• Will be finalized the report on the fiscal inspection that includes also the opinion of the fiscal authority regarding the point of view of the tax payer.
• In 25 working days from the ending date of the fiscal inspection, the tax decision will be issued.
• The document prepared by the fiscal inspection authorities can represent the basis of the referral documentation for the prosecution authorities;

In 45 days from the communication date, the fiscal decision regarding the imposed tax to be paid and the fiscal inspection report can be contested. The contributor may request to the competent authority to orally sustain his appeal. This request can be addressed within maximum 30 days from the date of filing the appeal, under penalty of forfeiture;

• In case of not solving the appeal within six months from the date of submission, the tax payer may request to the administrative court the cancelation of the act. The six months period does not include the periods in which the procedure for settling the appeal is suspended;

• If the solution is not favorable, the tax payer may appeal to the court.

Contexpert’s recommendations in case of a fiscal inspection:

• Go carefully through your rights according to the Fiscal Procedure Code.
• Cooperate with the fiscal inspectors, but without becoming familiar.
• Strictly answer to the questions, in legal limits, without giving more information than necessary.
• Do not divagate from the subject, do not give other information about the company than those requested and which fall within the legal framework.
• It is preferable to give written answers.
• Consult a tax adviser to avoid unpleasant situations (such as providing information and formulating answers that can be interpreted in the detriment of the company).