Romania: Additional tax measures adopted in the context of Covid-19
On Thursday, 16 April 2020, the Romanian Government adopted a new emergency ordinance, no. 48/2020 ("the Ordinance"), to help businesses successfully overcome the challenges of this difficult period.
The measures taken in the Ordinance include:
1) The deadline for submission of 2019 annual financial statements, i.e. accounting reports as on 31 December 2019, is extended to 31 July 2020
2) Tax incentives (e.g. exemption from income tax and/or social insurance contributions) for allowances granted for technical unemployment and paid parental leave are not applicable. The measure is applied to allowances granted starting in April 2020. The categories mentioned by the Ordinance include:
- Employees working in construction
- Individuals with severe disabilities
- People who carry out research, development and innovation activities
The allowances will be subject to income tax (e.g. programmers) and/or social insurance contributions (e.g. construction workers) as is the case for normal salary income.
3) Microenterprises are able to sponsorship public institutions and authorities, including specialized bodies of public administration, in that they are permitted to deduct the sponsorship amounts from the income tax they owe. The beneficiary does not need to be listed in the “Register of Cult Entities”
4) Benefits in kind granted to employees who work in positions considered by the employer to be essential to its business and who are in preventive isolation at work or in specially dedicated areas where persons from outside do not have access, are not subject to income tax and social insurance contributions
5) For the year 2020, taxpayers who are obliged to pay a specific tax for certain activities (e.g. hotels, restaurants) do not owe this specific tax for the period of partial/total shutdown of their businesses during the state of emergency
6) VAT refunds will be disbursed with subsequent tax inspection, except if the tax inspection commenced prior to the date on which the state of emergency was declared (16 March 2020) and in other cases based on a tax risk analysis performed on a case-by-case basis by the tax authorities
7) No interest or late penalties are due on late payment of instalments from rescheduled budgetary obligations if the instalments are fully paid by 30 days after the state of emergency ends
8) Taxpayers registered for VAT purposes that import completely denatured ethyl alcohol (used for production of disinfectants), medicines, protective equipment and machines for the production of protective masks, other medical devices or equipment and sanitary materials which can be used in the prevention, limitation, treatment and control of Covid-19 are exempt from payment of VAT for these imports during the state of emergency and for 30 calendar days after the state of emergency ends