(P) Tax flash: Legislative summary May 2013

Amendments to the Tax Code (Law No 168 approving Government Decision No 8 / 2013 “Government Decision”, published in the Official Gazette No 310 / 29 May 2013) Certain amendments and clarifications have been introduced concerning corporate income tax, personal income tax, microenterprises tax, withholding tax, VAT, excise duties and social contributions. Please refer to our Tax Alert no 13 / June 2013 for further details Tax procedure Amendments to the Order regarding the conditions and methods to suspend tax inspections in accordance with the Government Ordinance No 92/2003 regarding the Tax Procedure Code (Order No 467 / 2013, published in Official Gazette No 254 / 8 May 2013) Amendments were brought to the order regarding the cases when the tax inspection may be suspended, the length of the suspension period (for each case), the dates on which the audit is resumed, as well as the actions the audit bodies can take if e.g. they receive additional information after the deadline imposed / after issuing the tax audit decision. Amendments to the Government Ordinance No 92/2003 regarding the Tax Procedure Code (Law No 168 approving Government Decision No 8 / 2013 “Government Decision”, published in the Official Gazette No 310 / 29 May 2013) Regulations brought regarding the tax registration procedure of the foreign legal entities which have one or several permanent establishments in Romania. The tax liabilities of the permanent establishments registered until 30 June 2013 and unpaid until this date are retrieved by the foreign legal entity through its permanent establishment appointed for fulfilling the tax liabilities. Decision of the Constitutional Court (Decision No 101 / 2013, published in the Official Gazette No 290 / 22 May 2013)

The Decision concerns the constitutionality of a transitory provision issued upon change of the fine for incorrect / incomplete reporting of intra-Community transactions with goods in the EC Sales / Purchases list (Form 390), from 2% of the undeclared amounts to a fine ranging between RON 500 and RON 1,500.

This unconstitutionality exception was raised by a Romanian tax payer which claimed that the application of the new sanctions only to the facts detected after the entry into force of the Government Ordinance, does not take into account the principle of retroactive application of the more favorable law. The Court finds that the fine of 2% applied on the undeclared amounts may differ, being higher or lower than the new fine, namely RON 500 – RON 1,500. Thus, the Court considers that discrimination arise between companies who have committed contraventions and are in the same situation. Based on the Decision, the Court accepts the unconstitutionality exception raised by the Romanian tax payer as founded. We note that the Decision of the Constitutional Court is binding for the tax authorities when applying the provisions of the Government Ordinance no 92/2003 regarding the Tax Procedure Code