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The “ten commandments” of Taxation in 2016

Date: 10/29/2015
Source: PwC
The main tax issues according to PwC Romania tax professionals

The new Tax Code and Tax Procedure Code, through the legislative clarification and tax policy predictability they bring, are a real gain for the Romanian business environment. Furthermore, PwC’s professionals have produced the top 10 tax topics set to have a significant impact on the business environment and on the development of the Romanian economy in the coming period.

The top 10 tax topics are:

• Reconsidering how groups of companies are structured and how cash flow is managed from the stakeholders’ perspective in the light of the implementation of the reduced dividend tax of 5% as of 1 January 2016;
• The improvement of corporate cash flow and increased internal consumption following the reduction, simplification and diversification of the VAT rates, while also cutting costs and alleviating the administrative burden through the removal of non-harmonised excise duties;
• Narrowed time frame allowed for companies to recover VAT from clients undergoing insolvency proceedings;
• Legislating the direct application into national laws of the European case law regulating tax matters, and where national legislation is less restrictive, taxpayers’ right of having it applied should be recognized;
• Attracting as many holding companies as possible to Romania by requalifying foreign entities as subject to Romanian taxes if their place of effective management is located in Romania (in conjunction with the reduced tax on dividends);
• Cutting costs associated with cash flow by means of a simplified procedure on single tax groups;
• The trend towards a uniform tax base for individuals, irrespective of the income sources, in conjunction with the new methodology regulating inspections, applicable to individuals;
• Changes in the methodology regulating tax inspections and administration of major taxpayers;
• The recently adopted tax amnesty is a step towards encouraging voluntary tax compliance;
• Measures that may weaken the benefits of voluntary compliance, such as the penalty for non-disclosure, should be combined with measures to encourage compliance, such as voluntary disclosures, similar to the tax system of Anglo-Saxon countries.

“In an ever changing international tax environment, the enactment of the new Tax Code and Tax Procedure Code place Romania in a favorable situation. As we all know, the expectations of consumers and economic operators play an important role in the economy. With the prospect of gradual fiscal relaxation, Romania will become more attractive in the eyes of investors”, stated Mihaela Mitroi, Tax and Legal Services Leader, PwC Romania.

“We are facing a new beginning from the fiscal perspective, but tax measures alone are not enough to position Romania again on a sustainable growth path. It will take the continuation of structural reforms and the speeding up of investments in the infrastructure to build up the high performing economy we all want”, Mihaela Mitroi concluded.

About PwC:

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
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