Global income tax triggers confusion

More than one year after having entered effect, the new taxation system does not even have a final legal framework, as changes are in progress, without Ordinance 73/1999 on income tax and the other related ordinances being suspended.

Pressured by time, Finance minister Mihai Tanasescu in February promised that the first stage of modifying the normative acts in this field would be completed by the end of the month.

Although the legislative department within the ministry says the draft law has been completed, its enactment procrastinates due to the lack of approvals from the Finance leader.

However, in order to avoid creating chaos, the Finance Ministry extended the deadline for natural persons to submit tax statements from March 31 to May 31 as a precaution. This was only done by an announcement of Mihai Tanasescu during a press conference.

Therefore, where the law is concerned, the March 31 deadline still stands. So that the Finance Ministry should hurry. “This is complete lack of seriousness,” says Nicolae Done, fiscal doctrine manager at KPMG Romania.

“We need more time to prepare the implementation of the new taxation system. At the same time, we’ll try and take steps to help the population understand what global income tax is and why the need for it,” Tanasescu was saying. Modifying the legislation will obviously take up a great deal of time. As for educating the population, such actions have yet to turn from intentions into effect.

The fiscal system practically works through the same mechanisms as in the past years. Yesterday was the deadline for making early quarterly payments, which represent an instalment of the global income tax for freelancers or for those making money off rentals. Without income statements, the taxes were set depending on those paid in Q4, 2000.

The Ordinance on the global income tax has yet to be suspended, but it would be difficult for the law to take effect as long as the Government representatives officially state, “this tool does not fully meet the requirements for which it was created.”

This message alone leaves the impression that people should not worry too much about global income tax, as long as its enforcement is still not regulated.

“Oh, no, they should, because no matter what those at the Finance Ministry say, a law is still a law and fiscal inspectors have to perform controls under the law, and not by using some words as a guideline,” Nicolae Done told Ziarul Financiar.