A Government Decision amending and supplementing the methodology for the application of the Fiscal code was published on 31 December 2009. These norms provide a clarification to a number of areas.
Profit tax. Regarding the tax exemption for re-invested profit, the new methodology states that if the profits are reinvested in assets to be manufactured over several consecutive years, the incentive covers only the value of such assets booked and commissioned between 1 October 2009 and 31 December 2010. For purposes of the incentive, the manufacturing of technological equipment is defined as “produced by using own resources and booked as fixed assets in line with the accounting regulations” together with the article of the fiscal code related to depreciation.
Profit tax prepayments. In the case of taxpayers who were previously payers of tax on micro-company income in the preceding year but will have to make quarterly prepayments of profit tax starting from 1 January 2010, the amount of such prepayments should be determined with reference to the tax on micro-company income due for the preceding tax year. For taxpayers recalculating their profit tax regarding the preceding year the quarterly prepayments should be determined with reference to the recalculated profit tax.
Deductible and non-deductible expenses. Expenses incurred for VAT paid to a Member State on goods or services purchased in order to generate taxable revenues are tax deductible. Expenses incurred in remunerating employees by using equity instruments are deductible for profit tax purposes.
Dividend tax. The Fiscal code establishes that a 10% withholding tax is to be levied on dividends distributed by Romanian legal entities to open investment funds. The new methodology specifically rules out this provision’s applicability to optional pension funds or privately-administered pension funds, as lacking legal personality and not falling under the open investment funds in accordance with the capital market regulations.