Government Emergency Ordinance no. 87/2010 that announces the elimination of the annual minimum corporate tax was published on 30th September, 2010, in the Romanian Official Gazette, no. 669 and is effective from 1st October 2010.
According to new regulations, as of 1st October 2010, the minimum corporate tax due by Companies until now is cancelled. Taxpayers that had to pay minimum corporate tax by 30th September 2010, must pay the profit tax related to the third quarter of 2010 latest by 25th October 2010 and for the fourth quarter of 2010 by 25th February 2011.
The GEO provides that the new companies or those companies that registered a tax loss at the end of the previous fiscal year will have to perform anticipated payments of corporate tax on the amount resulting from applying the 16% tax rate on accounting profit of the period for which anticipated payment will be made.
Taxpayers who will make anticipated payments in 2011 shall apply
the following rules:
a) taxpayers liable to pay minimum corporate income tax between 1st January to 30th September 2010 and the taxpayers who owe corporate tax for the period of 1st October to 31st December 2010, will perform quarterly anticipated tax payments in the account of corporate tax at the level of a quarter of the amount resulted by adding the tax due for both periods of time, updated with the inflation index.
b) taxpayers liable to pay minimum corporate income tax between 1st January to 30th September 2010 for the period of 1st October to 31st December 2010 that registered a tax loss, will perform quarterly anticipated payments in the account of corporate tax at the level of a quarter of corporate income tax/minimum tax due for the first period of time (1st January – 30th September), updated with the inflation index.
Taxpayers who had the obligation to pay the minimum corporate tax up to 30th September 2010 inclusive, have to finalise the 2010 profit tax computation as follows:
a) For the period 1st January – 30th September 2010:
- Corporate tax, provided by Article 18 paragraph (3), is recalculated accordingly for the period of 1st January – 30th September 2010, by dividing the annual minimum tax to 12 and multiplying with the number of months for that period, in order to establish the due corporate tax (the same rule as before this GEO);
- Determine the corporate tax due;
- Submit the corporate tax statement for the period of 1st January - 30th September 2010 and pay the corporate tax due by 25th February 2011;
b) For the period 1st October – 31st December 2010:
- Taxpayers must submit the corporate tax declaration either before 25th February 2011 or before 25th April 2011 (similar to the previous conditions).
The determination of taxable income and corporate tax is carried out according to the calculation method provided by Title II "Income Taxes" of the Tax Code, as appropriate for the two periods, taking into account the incomes and expenditures recorded.
The tax loss recorded for the first and second periods of 2010 shall be recovered according to the provisions of Article 26, each period being considered fiscal year in terms of a period of 5 years and 7 years respectively.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.