AmCham worried by corporate taxation adjustments envisaged in Romania

Companies fear that the fiscal adjustment formula and other fiscal adjustments envisaged by the Romanian Government as part of the fiscal corrective package may disadvantage Romania compared to other countries in the region, AmCham explains in a note about the new fiscal measures prepared by Romania's ruling coalition.

The Government prepares a set of measures aimed at curbing fiscal optimisation and transfer pricing options with a view to increasing capital taxation. However, these adjustments were not publicly discussed. Furthermore, the entire set of corrective fiscal measures was insufficiently discussed, and it may include other such provisions with significant, potentially negative, effects.

The notion of "fiscal adjuster" for corporate income tax calculation is a complicated formula, which in brief means that companies at a loss will still pay profit tax in a percentage of about 0.5% (the calculation depends on a number of other factors) applied to total income, accordingto tax expert Luiza Daneliuc of Smart Tax Advisors.

It is similar to a turnover tax, AmCham points out. Furthermore, a category of expenses, such as consultancy and royalties, is not deductible for profit tax calculation.

The new corporate taxation regulations could lead to limiting Romania's capacity to attract greenfield investments, unjustified discrimination between companies belonging to a group and those that do not have such membership, or even blocking the investment plans of companies already established in Romania, AmCham argues.

At first glance, it can be concluded that the fiscal adjustment questions certain taxation principles, i.e. substance of transactions, market price, it says.

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