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Romania: “Discounts” for on-time tax payments made by 25 April (COVID-19)

Romania: “Discounts” for on-time tax payments

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.

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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:

  • Large taxpayers will receive a 5% discount.
  • Small and medium-sized taxpayers, as well as taxpayers that do not fall into any of these categories (for example, foundations, NGOs, private schools, etc.), will receive a 10% discount.

The incentive for corporate tax reductions also applies with regard to:

  • Taxpayers that pay specific tax and carry out other activities for which tax is due on profit (these reductions apply only to the profit tax due by these taxpayers)
  • Taxpayers that have elected a different financial year from the calendar year, provided they pay the amounts due by deadlines set between 25 April and 25 June 2020

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.


KPMG observation

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

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