Romania's Govt. sticks with plans to levy minimum profit tax

All companies with a turnover in excess of EUR 50 million will pay the turnover tax if the 16% profit tax is lower than the calculated turnover tax, Economica.net announced based on a leaked emergency ordinance draft. It is set at 0.5% if the company's return was below 3% and 1% if the rate of return was above 3%.

For banks, the turnover tax is 1% of the turnover and is added to the profit tax.

Based on another (or the same) leaked draft ordinance, Ziarul Financiar reported that finance minister Marcel Bolos "is very fond of" the "fiscal adjustor" principle – a concept that will help the Romanian Tax Authority to enforce fiscal discipline.

"The fiscal adjustment for the profit tax is an indicator of fiscal discipline, which aims to establish a minimum level of profit tax", explains the project.

Practically, in the case of companies, it (the fiscal adjustor, minimum profit tax or turnover tax) would be 0.48% of the turnover + 16% of the expenses that the Romanian Tax Authority often considers invented or amplified to take money out of the country/company and to reduce the taxable profit.

In the case of banks, the formula is 16% x 5% x CA + 16% (interest expenses + management consulting + royalties paid to affiliated legal entities from Romania or abroad). For banks, the turnover is calculated as the sum of gross interest income with fee income.

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