The new Fiscal Code, Law 227/2015, will come into force from 1 January 2016, but has already suffered changes through an emergency ordinance approved by the government on October 28. The changes are important for the entrepreneurs, shareholders, microenterprises, but also for all the companies which use water in the production process (food industry, agriculture etc).
The same addendum brings changes to the new Fiscal Procedure Code, law 207/2015.
The novelty with the greatest impact for the companies and investors is the decrease in dividend tax from 16% to 5%.
The reduced rate will apply to the dividends which will be distributed beginning with 2016. Therefore, the measure will bring an advantage to those who have not yet distributed dividends in previous years and who kept profits, from various reasons, such as reinvesting them. Probably, the government has opted to bring forward this measure (originally foreseen for 2017), on the assumption that the shareholders will not distribute dividends in 2016 pending the entry into force of the new 5% dividend tax rate.
Otherwise, for the dividends already distributed in 2015, even if they were not paid to the shareholders, will be used the same dividend tax rate of 16%, being applied the law in force from the moment the decision of the A.G.M (annual general meeting) had been issued.
We mention that, from 2016, in case of the dividends, according to the new Fiscal Code, the security contributions rate will remain the same. But beginning with 2017 will be due health contributions for these incomes, whether there are or not other sources of income such as wages, independent activities. The health contributions will be paid for the dividends, but also for other investment incomes (interest) from 2017, limited on five average gross salaries monthly.
The second important change brought to the new Fiscal Code through the emergency ordinance targets the microenterprises. Starting from 2016, in order to be considered microenterprises, the new maximum limit of the revenues for the companies will be 100.000 EUR, instead of 65.000 EUR. It results that more small firms will be able to pay the income tax instead of the profit tax. At the moment, according to the Ministry of Finance there are 450,000 microenterprises. Their number will increase significantly starting with 2016.
Starting from the next year, the changes will also be in respect of the microenterprises income tax rate. The new rates are established based on the number of employees and are taking into consideration also the duration of the employment contracts, in order to prevent potential abuses of the companies that could possibly use them as law tax vehicles for high salaries payments. It is obvious that the government quit, fortunately to the initial version proposed and amended subsequently in the Parliament which added to the tax rate a fixed amount representing the taxes and contributions payable for an employee having the minimum wage.
The tax rates approved will not disadvantage any company which is operating now or will be established starting with the next year. Instead, it is welcomed for the companies with many employees which will pay 1% tax.
We note that the government has kept the facilities provided for the start-ups. Thus, the start-up companies that have at least one employee and are constituted, for a period exceeding 48 months, and the shareholders have not held any participation titles in other legal entities, will apply a tax rate of 1% in the first two years from the date of the registration.
The same law reduces the VAT rate for water used both in industrial and domestic activities at a rate of 9%. The food and agriculture industries and projects covered from the European funds for water and sewer will be advantaged by this decision. In case of the population, we estimate that there will not be a significant impact.
The main changes are:
The profit tax
All the private high schools will be considered Romanian legal entities who do not owe income tax for the income earned and used according to the legal regulations in respect of education.
Dividend tax
The dividend tax rate will be 5% for:
Microentreprinses
The income taxes for the microenterprises will be:
Social Contributions
Will be excepted from the payment of the social security contributions for health, the persons who have an insurance for sickness and maternity in a country with which Romania applies a bilateral social security agreement having provisions for sickness insurance, maternity.
VAT
VAT rate will be 9% for supply of drinking water and water for irrigation in agriculture.
Local taxes
The deadline for the submission of the declarations on buildings owned by individuals or companies, having non-residential or mixed destination, of the statements regarding transportation means out of circulation and for the supporting documents issued in 2015 regarding the exemptions or reductions in the tax on buildings, lands or means of transport will be March 31, 2016 instead of February 29.
Fiscal procedure Code
The verification will be performed only after the individuals will be notified that the tax authorities requested information to the other authorities or institutions regarding the goods, accounts, incomes and so one relevant for the fiscal situation. In this moment the verification is done without prior notice, violating the European directive on protection of personal data.
Will be sanctioned with a fine between 500 and 1,000 lei all the legal entities and individuals, who do not respect the obligation to send to the NAFA, from 2016, the same information on money laundering that are now obliged to send to the National Office for Preventing and Combating Money Laundering.
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