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The microenterprises will be, again, able to opt for applying the corporate income tax

The microenterprises will be, again, able to opt for applying the corporate income tax

The microenterprises – companies with incomes below one million Euro, will be able, again, to opt for paying corporate income tax, according to an emergency ordinance adopted on Thursday by the Government. However, the change in the tax system will be possible only for the companies that meet cumulatively the following two conditions: a minimum share capital of 45,000 lei and a minimum of two full-time employees.

The possibility to apply the corporate income tax for the companies having a share capital of at least 45,000 lei will be reintroduced into the legislation by the emergency ordinance, after a similar mention was excluded at the beginning of 2018.

However, besides this condition, found in the legislation also in the past, a new one was added, the existence of at least two employees.

The new rules are part of a document amending the Fiscal Code, approved on Thursday by the Government and published in the Official Gazette on Friday, 30 March 2018.

Thus, microenterprises that have subscribed a share capital of at least 45,000 lei and have at least 2 employees will be able to opt, only once, for applying the corporate income tax, starting with the quarter in which these conditions are cumulatively fulfilled, the option being final.

Practically, the employee is considered the person employed with a full-time individual employment contract, but the condition will be fulfilled also in the case of microenterprises which:

• have persons employed with an individual part-time contract, if the fractions of the norm, summed up, represent the equivalent of an entire norm;
• have concluded management or mandate contracts, according to the law, if their remuneration is at least equal to the minimum gross salary per country, respectively 1,900 lei.

From the 1^st of January, 2018, the threshold up to which a company can apply the tax on microenterprise regime has been doubled from € 500,000 to € 1 million – total revenue.

Thus, the companies with revenues at the end of 2017, between half a million Euro and one million Euro were to pay instead of a 16% corporate income tax, the microenterprise tax, either 1% if there was at least one employee, or 3% for no employee.

Now, as the emergency ordinance approved by the Government was published in the Official Gazette, the companies with incomes of less than one million Euro will be able to pass to the tax on profit, as long as they cumulatively fulfill both conditions.

The new measures will also help those who are during the investment stage and obtaining losses or those who have a profitability of less than 6% from the turnover as they will again have a leverage to avoid paying the microenterprise tax.

Firms with a total income up to one million Euro, which have already filed a 010 or 700 form for changing the taxation regime (from corporate income tax to microenterprise tax) will be able to opt for returning to the corporate income tax, as long as they have a minimum share capital of 45,000 lei and 2 employees, at least. However, again, it will be necessary to change the fiscal vector – to file a new statement.

The document published in the Official Gazette no. 291, provides the option to apply corporate income tax applicable from the 1^st of April 2018. Therefore, in the first quarter all entities that had incomes below € 1 million will apply microenterprises tax, even if the conditions to opt for corporate income tax were fulfilled. Consequently, the fiscal losses recorded during this period will not be carried forward.

The Ordinance also introduces other tax regulations for microenterprises in order to stimulate investment and entrepreneurship.

The microenterprises will be able to deduct the sponsorships granted to nonprofit entities and to cult units which are social services providers and have at least one licensed social service. The deduction will be possible up to 20% of the quarterly income tax. The amounts which cannot be deducted from the income tax due in the quarter when the sponsorship is realized, could be carried forward in the next 28 consecutive quarters. This measure is applicable also starting with the 1^st of April, 2018.

The facilities announced by the Government will be offset by tax inspections and controls

Considering the fact that the measures will reduce the revenues for the budget, NAFA will have to take some measures to cover the deficit.

Thus, in the substantive note annexed to the project of the ordinance, there is mentioned a change in the way in which companies will be controlled and will be forced to execute the debts, the following measures being proposed:

• Ensure that at the level of the Anti-Fraud structures there are developed additional evaluation procedures to target possible practices used by entities which will be included in control, to transfer assets and / or money to other entities in order to make more difficult the recovery of the amounts established by NAFA through the control structures;
• Valorization of the data received from the General Directorate of Communication and Information Technology regarding the amounts declared and unpaid during the year 2018 by taxpayers in the sense of their aggregation at the CAEN code level and inclusion in the risk analysis with priority of the first 13 CAEN codes (total debts unpaid over 50 million lei) contributing in the highest proportion to the total unpaid amounts;
• Evaluation based on the NAFA database of the patrimonial situation for the companies subject to the risk analysis and the use of this information as criteria for the prioritization of anti-fraud controls;
• Monitoring of intra-community acquisitions – permanent action;
• Monitoring in collaboration with the customs authorities of the imports of goods with high fiscal risk;
• Carrying out actions for the verification of transactions consisting in intra-Community transactions with second-hand cars;
• Enhance the monitoring of online trading activities and conducting antifraud controls for entities identified with significant fiscal risks;
• Enhancement of unannounced controls to taxpayers with high fiscal risk and for which there is a high degree of certainty regarding the establishment of additional tax obligations to be paid;
• Intensifying fiscal controls on taxpayers which have registered a decrease in tax liabilities declared compared with the previous periods;
• Improving risk analysis and selection of the taxpayers for fiscal inspection by diversifying the risk criteria used to identify a target group of taxpayers, namely an economic branch, a sector of activity or services for which there were identified decreases in the fiscal obligations;
• Improving the fiscal inspection activity by reducing the duration of the tax inspection, which will lead to an increase in the number of fiscal inspections to be carried out in 2018;
• Permanent monitoring of all forms of forced execution of debtors;
• Organizing complex actions for the enforcement of significant debtors of the consolidated general budget;
• Checking the situation of debtors not listed in the bank accounts database and recording outstanding obligations in order to take all measures to identify the bank accounts from alternative sources.