The Romanian companies have to wait until 2005 to escape the hassle of declaring the profit tax every three months (and even every month in the case of banks). According to the Finance Ministry experts, the Exchequer will work on introducing the Western system of annual profit tax payment by 2005, so that the revenues and expenses will be sized up at the end of every year.
According to the tax reform programme negotiated with the European Union, the profit tax will also drop 5% as of 2005, down to 20%, whereas the dividend tax for legal persons will go up from the current 10%.
According to Finance Ministry projections, the Romanian Exchequer will learn the full extent of the losses posted by a company due to unrecovered receivables on December 31, 2006, with the value of the recovered losses to be fully deducted when the taxable profit is calculated.
The Fiscal Code draft, which will enter effect on January 1, 2004, stipulates 20% deductibility for losses related to receivables, much to the dissatisfaction of companies. However, the Finance Ministry has said these deductions may double in 2005.
After having reached Parliament quite late, the Fiscal Code bill has barely been debated by the Senate’s budget-finance Committee, which has been busy discussing the 2004 budget draft. The Code will be thoroughly discussed as of next week.
The Fiscal Code draft makes no mention of the flat tax, and even the Government’s initial suggestion (to enforce it as of 2005) was eliminated from the text. “Had we kept it, the parliamentary debates might have continued through next spring,” says Maria Manolescu, state secretary with the Finance Ministry in charge with tax policies.
According to minister Mihai Tanasescu, the introduction of the flat tax is a political decision, but he says he will keep working on this reform measure next year anyway, in the event it is eventually adopted in 2005.
Whereas there is still time for the Fiscal Code draft to be debated in Parliament, the tax procedure Code will have to be adopted by an emergency ordinance, Maria Manolescu said. This code has not even been finalised yet, and its current from has been harshly criticised by experts. Even more delicate is the issue of the enforcement norms for the Fiscal Code, which have not even been discussed with the consulting firms. This paves the way for new delays in drafting the tax legislation, which Romanian companies have grown accustomed to, but which may cause them problems in the first months of 2004, just as it happened this year. razvan.voican@zf.ro