Romanian tax experts warn problems remain in the revised fiscal chapter of second reform package

Romanian tax experts warned that the draft law published by the Finance Ministry after revision still includes major issues that not only challenge companies’ activity and lead to creative accounting, but also could make it vulnerable to litigation since it breaches EU regulations and economic principles.

The new draft law on corporate income tax will suddenly entail the re-labeling of services such as consultancy and management to fall within the 1% deductible expense percentage, according to Adrian Luca, first vice-president of Chamber of Tax Consultants (CCF), quoted by Economica.net.

In addition, lawyers are pointing to the discrimination between residents and non-residents included in the draft law.

The revised version of the draft law excludes the interest on loans between affiliates from the four categories of targeted expenditures. It also redefines the deductibility limit from 3% of the expenditures in the specific categories to 1% of the total expenditures. It also excludes the expenditures with affiliates registered in Romania from the targeted expenditures.

The law drafted by the Finance Ministry is part of the second package of reforms and, among others, replaces the minimum tax on turnover with limited deductibility of some categories of expenditures: initially four categories (including the interest paid for loans contracted from affiliated companies), but only three categories under the final draft.

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