Romanian government published the Law no. 227/2015 regarding the Fiscal Code on 10 September, 2015. The new Fiscal Code, coming into force in 2016 which brings the following amendments for the corporate and micro-enterprise income taxation system;
- Withholding tax on dividends paid by resident companies to resident and non-resident companies will be reduced from 16% to 5%, with effect from 1 January 2017.
- Dividends received from a resident company will be exempt. Currently, this is the case provided that the Romanian income beneficiary holds at least 10% of the share capital of the income payer for an uninterrupted period of 1 year.
- A new rate of 1% will be introduced for taxation of newly incorporated micro-enterprises that have at least one employee and are established for at least 48 months, if their shareholders did not own shares in other companies; the current 3% rate remains applicable to micro-enterprises in all other situations.
- The taxpayers that opted for a fiscal year different from the calendar year must declare this within 15 days from the beginning of the modified fiscal year, or from the registration date, as the case may be.
- Expenses incurred for sponsorship will give rise to a tax credit equal to 0.5% of the turnover or 20% of the corporate income tax due, whichever is lower.
- Social expenses (e.g. allowances for newborns, family members’ funerals, legally allowed gifts for children and employees, expenses related to maintenance of kindergartens) will be deductible up to the limit of 5% (currently, 2%) of the salary fund.
- Decrease of the threshold applicable for the deductibility of the interest expenses related to foreign currency long-term loans, that are contracted from entities other than those specifically mentioned in the law, from 6% to 4%.
