Among those many actions taken to modify, complete, republish or abrogate something in the fiscal legislation, Law 189/2001 on profit tax, enacted by Parliament last month, brings back a precious incentive for profit-making companies.
According to the new regulations, effective January 1, 2001, the economic operators making profit benefit from a 50% reduction of the profit tax for the amounts invested in tangible and intangible assets during the current fiscal year.
The incentive is therefore intended to help those companies making profit, and especially those registering high profits, which enables them to reinvest. The start-ups are somehow at a loss here, as they have to make profit first, in order to be covered by the law.
However, most of those companies fall into the SMEs category, which under the Law 133/1999, re-enforced by Emergency Ordinance 297/2000, are exempt from paying tax for the share of reinvested gross profit.
The new law is an attempt of the Finance Ministry to please all the companies registering profit: the small ones go on exempt, and the big ones get 50% off the reinvested profit tax.
“The 50% off reinvested profit tax issue is no news,” Mihaela Mitroi, senior manager at PricewaterhouseCoopers, told Ziarul Financiar. She explained that such measures to encourage investors had been used over the past ten years, as well, going as far as to offer 100% off reinvested profit tax at times.
“The procedure and applicability considered, this is more difficult to enforce than it used to be, because companies have to make profit before meeting the provisions of the law,” Cornelia Petreanu, head of the Legislation Department within the Finance Ministry, says.
She feels drafting methodological norms is not necessary, all the more since those about enforcing Emergency Ordinance 217/1999 on profit tax are still in effect.
Law 189/2001, recently enacted by Parliament, practically endorses Emergency Ordinance 217/1999, which modified and completed Ordinance 70/1994 on profit tax.