The Ministry of Finance released Ordinance No. 488/14 reducing the maximum income tax rate for categorization of a tax regime as a privileged tax regime from 20% to 17%. This tax rate was effective from November 2014.
Accordance to the Ordinance, this maximum income tax rate will be applicable for determining privileged tax regimes for the purposes of the application of the thin capitalization rules and transfer pricing rules. In case of transactions with companies that are subject to a “tax privileged regime” the thin cap ratio of 3:1 is applicable instead of the standard ratio 2:1 and withholding tax rate of 25% applies instead of the 15% rate.
