The relationship with the fiscal administration will be more fair for the taxpayers. This is the promise made by the authorities when they have made public the draft of the fiscal procedure code.
After a review of the main propositions, Contexpert concluded that:
1 For the first time, the authorities admit that the present tax audit procedures are not unitary and might generate dificulties in practice (presented as follows)
But, the the actual improvement of the legal provisions of the Title Tax Audit solves in part these issues (there are also several novelties, also presented as follows)
2 The draft includes an absolute novelty which, unfortunately, is not in favor of the taxpayers: the penality for undeclared taxes as they are determined during the fiscal audit (in practice it means that the undeclared amount will be suplemmentary taxed with 39,6% per year, presented as follows)
Corroborating these proposition with the reduction of the main taxes, Contexpert anticipates risks for businesses: the tax audits might asses higher tax obligations. Why?
1. The fiscal procedure code in force has several controversial provisions with impact for businesses. Even the authorities admit this situation. For example: the audit by sampling is not unitarily applied and objective criteria do not exist during the selective verification of the tax payers. We consider that these legal shortcomings are not completely solved.
2. The penalty for undeclared/not declared taxes is:
• 5% of the undeclared/not declared taxes, if the amount determined by the tax audit is less than 25% of the amount of the declared taxes
• 25% of the undeclared/not declared taxes, if the amount determined by the tax audit is over 25% of the amount of the declared taxes.
The penalty is increased with 100% if the undeclared/not declared taxes are the result of the tax evasion according to Law 241/2005.
The penalty is limited to 1,000,000 RON. The limitation does not apply in case the amount is the result of tax evasion.
The draft also decreases the delay penalties and interests to 0.02% per day, from 0.03%. The annual cumulative quantum decreases to 14.6%.
Consequently, the penalty for undeclared/not declare taxes and the delay penalties mean together a suplementary tax of 39.60% per year.
This penalty might generate difficulties both because of the tax audit procedures and the misinterpretation of the legal provisions.
The situation is admitted also by the authorities as they write in the presentation of the draft: „the penality for undeclaring/not declaring and the delay penalty does not apply when the tax differences result due to the interpretation of the tax administration according to internal documents, instructions”.
How these intentions are to be put in practice, we shall see. Our experts recommend a thorough audit of your business in order to prevent the potential risks as much as possible.
Other propositions of the Title „The Tax Audit”:
– the tax audit will be made both at the taxpayer and the payer. The payer is the entity that makes operations in name of the taxpayer (collects/pays taxes, contributions)
– it is provisioned the right of the taxpayer to be informed every time the authorities decide to delegate the competency of the tax audit
– the term to present in writing the point of view regarding the findings of the tax audit is increased (from 3 to 5 days and to 7 days for large taxpayers)
– the communication of the tax audit notification in all cases, with no exception, is stipulated
– it is established the possibility to issue provisional tax decisions during the period of the tax audit
– the tax audit, the unannounced audit and the antifraud audit are defined more clear
Note! The draft establishes that the minutes made by fiscal bodies during the tax audit may represent documentation for criminal complaint.
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