G.E.O. no. 153/2020 – new tax facilities related to corporate taxation and clarifications of those already granted
New tax facilities related to corporate taxation
Government Emergency Ordinance no. 153/2020 (hereinafter G.E.O 153) was published in the the Official Journal of Romania no. 817 on 4 September 2020. This ordinance sets out measures to reduce profit tax, the income tax of micro-enterprises, as well as the specific tax. G.E.O 153 makes updates to G.E.O. no.33/2020 in relation to certain fiscal measures, to clarify the method for granting the bonus upon finalization of the profit tax due through the annual declaration.
Stimulus measures to increase equity
In order to stimulate the capitalization of companies, as well as to unblock cash flows, G.E.O. 153 grants reductions for taxpayers paying corporate tax, income tax on micro-enterprises and activity-specific tax. The reductions granted vary and apply to situations where taxpayers:
- Register positive equity, established according to the accounting regulations, at the end of the fiscal year; the level of reduction is 2%.
- Register increases of equity, in the current year compared to the reference year 2020, or compared to the previous year.
- For the increase of the adjusted equity in the current year compared to the previous year, the level of reduction varies between 5 and 10% depending on the intervals of annual increase of the adjusted equity (i.e. up to 5%, over 25%).
- For the increase of the adjusted equity in the current year, compared to the reference year 2020, the level of the reduction is 3%, if the minimum percentage increase of the adjusted equity falls within the following values:
The 3% discount only applies starting from 2022.
If two or three of the conditions for applying the reduction are met, the percentages should be added together. The reductions are granted only if the condition of positive equity is met at the same time.
G.E.O. 153 also includes specific provisions for applying the reductions in the case of taxpayers which have a modified fiscal year. Clarifications are also provided for the establishment of the adjusted capital in the situation of reorganization operations, as well as in the case of taxpayers which, in the year for which they owe tax, create permanent headquarters of foreign legal entities, as a result of merger operations, total division, partial division, transfers of assets and exchanges of shares involving companies from two or more EU Member States.
Institutions in the field of banking, capital markets, insurance and reinsurance are not eligible for the above mentioned reductions, as these taxpayers have specific capital requirements, set separately according to national and European regulations.
The tax reduction applies to the tax due for the entire fiscal year, in the case of corporate tax payers and payers of micro-enterprise tax. If the amount of the reduction is higher than the annual tax due, the difference is deducted. For activity-specific taxpayers, the reduction applies to the tax due for the second half of the year.
The deadlines for filing the tax returns and paying the tax have been extended until 25 June inclusive of the following year for taxpayers paying corporate tax, income tax on micro-enterprises, as well as the specific tax.
For taxpayers with an amended fiscal year, the annual income tax return should be submitted no later than 25th inclusive of the sixth month following the end of the amended fiscal year.
Additions brought by G.E.O. 33/2020 to some fiscal measures
With regard to the annual income tax return, the bonus applied is deducted from the value of the profit tax for the fiscal year, the maximum level of the bonus being limited to the level of the respective tax.
Taxpayers with a modified fiscal year will benefit from a bonus for the profit tax difference due, determined when the profit tax related to the fiscal year is finalized. Thus, it will also apply to the profit tax difference due if it is paid by the due date between 26 December 2020 and 25 February 2021 inclusive.
Taxpayers with a modified fiscal year, which have not received bonuses, can benefit from them by submitting a rectifying declaration.
The bonus is also granted for the profit tax due quarterly / the quarterly advance payment, which can be covered by the profit tax recoverable from the previous fiscal years. These provisions also apply to settlements made for the quarterly profit tax / quarterly advance payment for the first and second quarters of 2020, as well as for those for the periods 25 June -25 December for taxpayers with a modified fiscal year, with profit tax recoverable from previous fiscal years.
These provisions are also applicable to taxpayers which have filed the declaration on income tax due quarterly / quarterly advance payment for the first and / or second quarters of 2020, as well as for the due periods for taxpayers with a modified fiscal year, without applying bonuses by submitting an amending declaration.
Starting with the date of entry into force of G.E.O. 153, the monthly and occasional draws of the Receipts’ Lottery are suspended. These will be resumed within 90 days from the date of cessation of the state of alert / emergency, as appropriate.
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