No profit tax for small enterprises

According to the ordinance on small enterprises taxation, the companies falling into the category of small enterprises, as stipulated by the Law, are profit tax-exempt starting with September 1 and have to pay only a tax quota of 1.5% levied on the quarterly revenues, irrespective of their source.

A company must comply with several requirements by December 31, 2000 in order to be considered a small enterprise. It has to be a material goods producer, service supplier or merchandiser, it must have up to nine employees, it has to register revenues up to 100,000 euros, while its capital should be entirely private.

Banks, insurance companies, investment companies, investment management and deposit companies, securities trade companies and the firms exclusively dealing in foreign trade do not benefit from this law.

The Finance Ministry is to issue a decision approving the methodology according to which the small enterprises will organise their account books.

The small enterprises delivering goods or services to the population and not issuing invoices will have to use fiscal cash registers. Costs related to the acquisition of these cash registers are deducted from total revenues subject to taxation, in order to encourage the companies to buy them.

Profits invested in tangible and non-tangible amortisable assets are tax-deductible, as well. Small enterprises creating 10% more new jobs as compared to the previous fiscal year may benefit from a 20% tax cut.

The ordinance regarding small enterprises taxation was enforced later than expected because of concerns that many entrepreneurs might benefit from these incentives undeservedly.

The Government has eventually decided that this Law is compliant with the Finance Ministry strategy of increasing the number of taxpayers by introducing gradual fiscal relaxation, as forecasts point out that tax evasion will decrease following the enforcement of this ordinance.