Changes to Fiscal Code Provisions Regarding Direct Taxation of Corporations – Implications for Financial Audit

Author:Ionuţ SAS, PwC; Romana SCHUSTER, PwC

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Keywords:Fiscal Code, corporate tax, deferred tax

Abstract:
On company tax matters, the most important change is the introduction of a new tax incentive, the long promised and awaited exemption of reinvested profit from corporate income tax. In this paper, the implications for financial audit ar discussed, and also the issues associated with its application.\r\nThe Fiscal Code was also amended as of 1 January 2010, but most of the new legislative provisions do not change the current tax regime. They are rewordings for clarifications purposes and/or reinforcements of the already applicable regime, as clarified in the norms to the Fiscal Code. Also, the Tax Code has been completed with several provisions of the European Merger Directive expected to be implemented in the domestic legislation. Such provisions, although not likely to impact immediately the work of Romanian auditors provide more legal certainty in general and are thus welcomed. Still, certain definitions for tax recognition purposes have been amended. Among these amendments we mention change in the definition of fiscal value of long-term assets, such that it will be now more in line with their accounting value, established and re-valued in accordance with European Directives. For dividends, the taxable base is better defined and the payment of tax for dividends declared but not paid within the same year is now set at a more convenient time, 25th of January of next year. \r\nFinally, it is also briefly discuss what are the most important tax regime changes of the year to be soon closed, year 2009, which has seen the advent of the minimum tax, restrictions on deductibility of car related expenses, and the taxable revaluation reserve. \r\n

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