An ordinance (no. 33 / 2020) provides incentives—a discount—for on-time payments of corporate income tax or the tax on the income of micro-enterprises that are due on 25 April 2020 for the first quarter of 2020 as a response to the coronavirus (COVID-19) epidemic.
In addition, a requirement to pay value added tax (VAT) on certain imports of goods that are needed to combat the COVID-19 pandemic is postponed, and importers will apply the reverse-charge system.
Incentives for on-time payment of profit tax or tax on the income of micro-enterprises for first quarter of 2020
Government Emergency Ordinance no. 33/2020 allows a “discount” for taxpayers that pay their profit tax / quarterly advance payment for the first quarter of 2020 (due on 25 April 2020) on time. The discount is applied by the tax-paying entities and will be a different amount, depending on the category in which the taxpayer falls:
The incentive for corporate tax reductions also applies with regard to:
Taxpayers that pay profit tax will be required to include separately in the annual declaration of profit tax the amount of the discount calculated under the ordinance.
Taxpayers that pay the micro-enterprise tax will benefit from a 10% discount for the payment of the tax due for the first quarter of 2020, with the payment deadline of 25 April 2020. They are to deduct from the amount of tax due the allowance calculated according to the ordinance.
Facilities regarding VAT
During the period of the state of emergency related to the COVID-19 pandemic and for another 30 days after its termination, the requirement to pay VAT at the time of import for medicines, protective equipment, other medical devices or medical equipment and sanitary equipment used in efforts to combat the COVID-19 disease has been deferred. Details on subject products are listed in an annex to the ordinance. Importers need to account for the related VAT under the reverse-charge mechanism. Deduction of VAT is subject to the general rules.
In addition to the tax provisions, the ordinance (Article 3) provides clarification on eligibility for the “certificate for emergency situations” (CSU). Companies are eligible for the certificate if either their revenues or their receipts have fallen by a minimum of 25% in March 2020, compared to the average of revenues for January and February 2020 or if their activity has been partially or totally interrupted as a result of the decisions or decrees issued by the authorities during the state of emergency. Thus, companies need to consider whether to report based on their revenues or based on their receipts (by means of an affidavit) for purposes of determining the decrease in income caused by pandemic or the state of emergency.
Read an April 2020 report prepared by the KPMG member firm in Romania
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.