Already for several months, all the fiscal changes that the PSD-PNL government has prepared for Romanians have been known. The list below comes as a major blow to the pockets of the vulnerable, but especially to small entrepreneurs who try not to leave Romania.
The Ministry of Finance published this morning the final document with the new Fiscal Code, with the tax increases. Many are unhappy with these changes, and they will most likely cost both the Social Democrats and the Liberals dearly in the next election. However, the fact seems to be consummated, and the document will be adopted in the following days, if not today, according to the document available here, quoted by Hotnews.ro.
What is changing in the Fiscal Code, the new taxes for Romanians
Profit tax
According to some analyzes carried out on the fiscal obligation owed to the state budget by the taxpayers paying profit tax and the taxpayers paying tax on the income of micro-enterprises in relation to the turnover achieved, it emerged that there are taxpayers paying profit tax who register a higher tax burden lower than a taxpayer paying tax on the income of micro-enterprises in the conditions in which they present similar financial indicators.
In this framework, it is necessary to strengthen fiscal discipline by establishing a minimum tax related to the turnover for the determination of the profit tax due by the profit tax payers who present situations where the tax due quarterly/annually is below a minimum value, such as and where the cumulative tax result at the end of the accounting quarter/year is tax loss or taxable profit, before tax loss recovery from previous years.
Also, a turnover tax is established, in the case of credit institutions – Romanian legal entities and the Romanian branches of credit institutions – foreign legal entities, based on the turnover, in addition to the profit tax.
The minimum/additional tax related to the turnover ensures a minimum taxation on account of the budget revenues from the profit tax, from the respective taxpayers, especially for those who register losses repeatedly.
Tax on the income of micro-enterprises
Currently, there is a single tax rate of 1% for all microenterprise income tax payers, without structuring their taxation according to profit margins.
In the Report on the tax system in Romania, including the comparative analysis and recommendations for the reform of the tax framework, hereinafter referred to as the Report, among other aspects related to the taxation system for micro-enterprises, the World Bank also analyzed the tax rate of micro-enterprises, opining that the current rate of 1% taxation, must be revised according to the profit margins recorded by micro-enterprises.
Taking into account the corporate income tax rate of 16%, the World Bank considers that applying a microenterprise income tax rate of 1% effectively corresponds to a profit margin of 6.25%, after tax deductions allowed by law.
Referring to analysis by the International Monetary Fund (2022), which suggests that the average profit margin of SMEs with employees is around 12%, the World Bank opines that a tax rate of 1% is a low rate for micro-enterprises with employees.
Income tax and mandatory social contributions
1. According to the legal provisions in force, natural persons who obtain income from salaries and similar to salaries, based on the individual employment contract, the service report, the act of delegation or secondment or the special status provided by law, are exempt from paying income tax , as a result of carrying out the activity of creating computer programs, under the conditions established by joint order of the Minister of Research, Innovation and Digitization, the Minister of Labor and Social Solidarity, the Minister of Education and the Minister of Finance.
2. According to the current provisions, benefit from the fiscal facilities granted in the construction sector, as well as in the agricultural sector and in the food industry, natural persons who obtain income from wages and salaries, based on individual employment contracts, with employers who meet the conditions established by the Fiscal Code. The provision applies until December 31, 2028 inclusive.
Among the conditions for granting fiscal facilities for natural persons who earn income from salaries and salary-related income, there is also the one related to the level of the gross employment salary for 8 hours of work/day of at least 4,000 lei per month for the construction sector and, respectively, 3,000 lei monthly for the agricultural sector and the food industry.
Currently, there are no provisions regarding the number of individual employment contracts for which an employee can benefit from the respective tax facilities. In the case of natural persons who earn income from wages and salaries on the basis of an act of secondment on the territory of Romania, the exemption applies if the income payer, to whom the natural persons are seconded, carries out on the territory of Romania the activities expressly identified by the Fiscal Code and fulfills the conditions stipulated by it.
3. According to the current provisions of the Fiscal Code, expenses representing meal vouchers granted by employers, according to the law, are limited deductible expenses in order to establish the annual net income from independent activities.
