VAT payment after receipt of the amounts

Romanian Senate approved in March 2010 the Law stipulating that corporate taxpayers will have the possibility to pay VAT resulting from the issuing of the invoice to customers within 30 days from receipt of the amounts and not until the 25th of the month following the month in which the invoice was issued.

This amendment is contrary to the European Directive 112/2006, which states as a general rule that the payment liability appears at the time of the delivery of goods, at the date of services provisioning and on the date of receipt of advance payments before delivery or performance.

However, notwithstanding the general rule regarding the generator event and VAT payment, at art. 66 from the European Directive 112, there is stated that EU Member States may stipulate that VAT becomes chargeable for certain transactions or certain categories of taxable persons, the latest at the payment date.

In the current European context, the evolution of unemployment rate is particularly important for major investments as well as for small and medium sized enterprises. Forecasts are bleak as possible : “I think unemployment rate did not reach yet its highest rate, but this will happen in 2010, in the first or second quarter. I do not think we will reach a rate of 10% but this is my opinion, “said the economist of the World Bank, Catalin Pauna.

Here we are in the second quarter of 2010 and taking into consideration the overview of the first quarter of this year we can say that the forecasts are not far from being fulfilled. If the unemployment rate in Romania for the last quarter of 2009 was 7.5%, in the first quarter of 2010 it reached 8.3% in comparison to 5.6% in the same period of last year.

This applies not only to Romania, the same upward trend being valid for Bulgaria too, another country in the region.

The Romanian Government decided to offer starting with 1st of February 2010, another period of three months of technical unemployment during which the social charges for the employees will not be paid, but the employers have to certify the difficult period of their company by giving a statutory declarations. These companies will be periodically checked by ANAF.

The new period of technical unemployment will be applied from February 2010 but not later than December 31, 2010. During the suspension of the individual employment contract the employees and the employers (of those employees) are exempt from paying social security contributions for no more than 90 days.

Until few years ago, Romania was still full of tourists spending their holidays in Mamaia, Eforie, 1 Mai, and was welcoming them, in the specifically hospitality spirit with inflated prices, lowest quality service and forced smiles. We were enjoying it or, better, we had to enjoy it because we had no choice.

Today, the situation is different. Our Bulgarian neighbors saw that we have a problem and found a very suitable solution to our needs: they learn Romanian language or employed Romanian-speaking Bulgarians, they nicely smiled to foreign investors and now, the majority of Romanian tourists but not only, already changed the itinerary of their holiday to Bulgaria. Who has not heard of Golden Sands, Albena and Balchik? 1-0 for Bulgaria.

Personnel layoffs, in both private and public system, are one of the most common topics in the mass-media our days.

Regarding this issue, for most of us 2009 meant fear. It seems that even the new state regulations have formed premises to personnel reduction.

But, we come to ask now if dismissal is really the only alternative to reducing the personnel cost?
The answer is far to be a simple yes or no. Many factors are involved in this decision such as:

• the business of the company;
• suppliers and customers;
• number of competitors in the market;
• substitution rate of products and services
• the future strategy of the company

Taking into account all these factors, when the management concludes that a company needs to reduce costs, a careful analyze regarding the following issues is request:

We are în the crisis: crisis of trained people, resource people, talented people.

And we are also in the crisis of people able to identify, develop and keep the resource people in the companies.

Ascent Group is your partner in the process of personal and professional development of your employees, because the continuous personnel development is a need felt by any company especially during the curent economical context.

Ascent Group brings a modern vision into the learning process, by emphasizing the benefits of “learning by doing” through exercises, role-plays and behavioral modeling. Our training programs have an interactive approach, are personalized and addressed to each client’s unique demands, to their visions and organizational objectives.

At the end of last year, the European Commission approved a program proposed by Romania which is valid until December 31, 2010 and is expected to offer support to the companies that have financial problems due to the worst conditions of the economic crisis.

The financial support may be granted by the Romanian authorities only to companies that were not în difficulty on July 1, 2008. The companies will receive grants, concessional loans, interest subsidies, guarantees or phasing the claims hold by the state without charging interest.

Training was one of the most affected sectors uring the crisis. We all know that training market dramatically decreased last year, due to the “education cost freeze” process in most of the companies.

However, even during the crisis period, some of the topics were highly requested by companies, especially because they respond tu curent needs.

One of the most popular training modules during the crisis, was certainly the one related to entrepreneurship and the ways to use the basics of entrepreneurship in the work activities, dedicated to managers and employees who want to develop their entrepreneurial spirit in their jobs. The difference that this new module is bringing on the Romanian market is encouraging the employees of the companies to build and grow a business and not just to manage it.

In 2010, in addition to the minimum tax that has got no economical logic, the tax system for micro-enterprises in Romania was adjusted as well, from an income tax based on applying a rate of 3% on revenue, to the implementation of an income tax with a rate of 16%, even further burdening these enterprises that have been already affected by the global economic crisis.

I believe that eliminating the income taxation of micro-enterprises and keeping the minimum tax which, I repeat, has no economical logic, will substantially contribute to the suspension or closure of many companies and certainly the growth of tax evasion in 2010.

According to the communication of the Ministry of Public Finance of Romania, on January 27, 2010, starting with January 1, 2010, the provisions of Title IV ‘Taxes on the Income of Micro-enterprises “, the application regulations, as well as other provisions incident to this system, are not longer produceing legal effects.

In accordance with the provisions of Art. 107 of Law no. 571/2003 regarding the Fiscal Code, the taxation system for micro-enterprises had a limited application in time, ending on December 31, 2009, by way of regulating tax rates only for the years 2007-2009.

Under current legislation, employers in Romania are required to register the individual employment contracts at Labor Inspectorates within 20 calendar days from their closing and to transmit them to the General Registry of Evidence of Employees within 5 days.

Due to some new regulations, as a measure against tax evasion, the Labor Ministry published the GD. 37/2010 on January 20th, 2010 which states that employers must register in the General Registry of Evidence of Employees the employment contracts and the identification data of employees – name, surname, personal identification number, date of employment, position, type of contract – not later than the previous day of the beginning of work by the employee. The employment contract must be submitted online or presented at the Labor Inspectorate on the same date, the term of 5 days given to employers to communicate this information at the Labor Inspectorates being eliminated.

In the Romanian Official Gazette No.761 of November 9, 2009 was published the Law nr.329 of 05.11.2009 amending the Tax Code with an new Article, namely Article 19.2 paragraph (1) which states a tax exemption on the reinvested profit.

Thus, by law, the profit invested in the production and/or acquisition of equipment (machinery, equipment and work facilities), as stated in subgroup 2.1 of the “Catalogue on classification and normal periods of operating fixed assets, used in order to obtain taxable income” is exempt from tax.

The exemption from tax applies only to assets considered new, by this understanding that they were not used before the publication of these provisions.

Profit invested under Law 329 of November 9, 2009, represents the balance of the profit and loss account, representing the cumulative accounting profit from the beginning of the year and is used within the year when the investment is made.

The Government Ordinance amending the Tax Code which will apply from January 1, 2010 has been adopted and does not contain any provision on the reduced tax of 3%.

According to the Tax Code for 2010, published by the National Tax Administration Agency, micro-enterprises will pay from January 1, 2010 an income or profit tax of 16%, as the reduced income tax of 3% applies only until 31 December 2009, as indicated in the Article 107 of the Tax Code:

“The tax rate on micro-enterprise’s income is 2% in 2007, 2.5% in 2008, 3% in 2009”.

The Finance Ministry has expressed its intention of not changing the tax rate of 3% for micro-enterprises, with the possibility of extending its application for a further year. These are only expressed opinions, as there is no legislation in this regard till today.

If this tax rate will disappear, all the advantages that firms bearing the status of micro-enterprises benefited from, will be abolished from 2010.

The portal e-Romania will be launched on December 25th with the first ten services. So whether you must pay a tax on a good or a fine, starting with this date you can do it directly on internet, saving any unnecessary travels or lossing time staying at the endless queues.

Later on, the portal will cover other areas such as education, health and culture.

A better news is coming, but for legal entities: within maximum 89 days, all companies will be able to present the balance sheets and pay all the fees online.

According with the World Bank, Romania has currently one of the most bureaucratic tax administrations in the world.

If on December 25 the portal will be really launched , then we could say that we are witnessing a great step that Romania is doing towards information technology and, implicitly, to improve the communication between the State and its custumers, the taxpayers.

Starting with October 2009, Mirela Dinu became the new coordinator of finance and accounting department of Ascent Group office in Bucharest.

Mirela graduated the Academy of Economic Studies in Bucharest, Management and Business Administration specialization. Her professional experience includes 5 years in developing projects as economist and accountant for important companies from the Romanian and foreig financial market. In all these years Mirela has developed activities of management, financial reporting and economic analysis.