During this period of global crisis and isolation of employees, fulfilling all fiscal obligations and adapting to legislative amendments announced almost daily represents a challenge for companies.
Given the current situation, you can find below the implications of this crisis in terms of customs duties, excise and Environmental Fund contributions, as well as the opportunities companies have in this regard.
KPMG can assist companies in drafting tax returns and submitting them to the Romanian tax authorities, based on a power of attorney. We can also help with a wide range of tax issues you might face during this period.Taxes due in customs
Taxes due in customs
Government Emergency Ordinance (GEO) no. 29 of 21 March 2020 concerning some economic and fiscal-budgetary measures introduced in art. VII a measure long-expected by the business environment, i.e. that fiscal obligations due starting from 21 March 2020 and not paid up to 30 days from the cessation of the state of emergency will not be considered as outstanding fiscal obligations nor will late payment interest and penalties be calculated or owed.
In this context, there is a question about what happens to the taxes that should be paid at the time of import (e.g. customs duties, VAT, excise duties). According to the Fiscal Procedure Code, these represent fiscal obligations that fall within the scope of art. VII mentioned above. However, in the absence of a specific procedure or, for customs duties, in the absence of the agreement of the European Commission, these taxes still have to be paid at the time of import.
According to a press release published on the website of the Ministry of Public Finance, a request has been sent to the European Commission for authorization to apply exemptions from customs duties and VAT, but only for imports intended to prevent and combat the spread of coronavirus COVID-19. For protective equipment the applicable VAT rate is 19% and the customs duties vary according to the tariff classification of each product (for example, for surgical masks the customs duties can reach 6.3% of their value, and for rubber surgical gloves the customs duties are 2.7%).
Import VAT payment relief
According to GEO no. 33 of 30 March 2020, taxable persons registered for VAT purposes according to art. 316 of the Fiscal Code (Law no. 227/2015) will not perform the effective payment of the VAT related to the imports of medicines, protective equipment and other medical and sanitary devices that can be used to prevent, limit and combat COVID-19, during the period that a state of emergency is declared in Romania, as well as for 30 days after its termination. These taxable persons will reflect the VAT related to these imports both as an input and as output VAT in the VAT return, the right of deduction being exercised according to the general rules provided by law.
Furthermore, during this period, companies may apply online to obtain certain customs authorizations, such as the customs clearance procedure (i.e. entry into the declarant's records), which involves much less interaction with the customs authorities. Moreover, authorizations that expire during this period do not have their validity automatically extended, but they can also be renewed online, by accessing the EU Customs Decision System portal.
As a general rule, any excise payer is required to submit a monthly excise declaration to the relevant authority (Form 100), by 25th of the following month. This is also the payment deadline, except for cases for which another payment deadline is expressly stipulated. Also, any excise payer is required to submit annually to the relevant authority an excise statement (Form 120), no later than 30 April of the year following the reporting year. The model of this form has recently been amended by law.
The deadline for submitting the excise declaration has not been postponed by any normative act, but the payment obligations are subject to the provisions of art. VII of GEO no. 29/2020, as mentioned above. Thus, if an excise payer chooses to postpone payment, the related excise duties will not be considered as outstanding fiscal obligations during the state of emergency and for a period of 30 days after its termination. Therefore, during this period the authorities cannot suspend / revoke for this reason excise authorizations (for example, tax warehouse authorizations).
Environmental Fund contributions
The Environmental Fund Administration (AFM) has recently published on its website a press release in relation to certain measures applicable in the period during in which a state of emergency is declared in Romania, with the possibility of extension, depending on the development of the situation.
According to the press release, the deadline for the submission of the Environment Fund declaration related to February 2020 has been postponed until 25 April 2020.
This measure comes in the context where starting from 2020 these returns should have been submitted exclusively online, according to the AFM’s initial statements. However, the AFM later announced that due to a large number of applications for enrolment in the online system, the time for analysing these applications can reach 30 - 45 calendar days, and, therefore, the period during which the returns can be submitted in physical format (on paper) has been extended.
According to the same AFM press release, tax inspections have been suspended, except for audits that can be carried out remotely and for cases of tax evasion, where there are indications that this may have taken place. Moreover, foreclosure proceedings by the tax authorities to recover debts to the budget have been suspended or, as appropriate, will not start, except for amounts deriving from judgments given in criminal matters. In this respect, no summonses will be issued, nor will accounts or traceable income be blocked, and nor will goods be seized.
However, this AFM press release has no legal force and GEO no. 196/2006 on the Environmental Fund which regulates the deadline for submitting the monthly return has not been amended. Nevertheless, taking into account the current situation, as well as the fact that many taxpayers do not yet have the possibility to submit the return online, in our opinion, the authorities will not impose fines for not submitting these statements on time.
In relation to the payment obligations to the Environmental Fund, considering that several contributions have a monthly payment deadline, we consider that the provisions of art. VII of GEO no. 29/2020 are applicable, and, if the contributions are not paid, during the state of emergency and for 30 days after its termination, they will not be considered as outstanding fiscal obligations and late payment interest and penalties will not be calculated.
© 2021 KPMG Tax SRL, a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.