Business Law_Course 11_Introduction to Fiscal law

JAN - 06 - 2014
Fiscal law regulates legal relations arising in the administration of taxes and fees from individuals or legal
entities which obtain income, hold taxable goods or who make expenditures that fall within the scope of
tax.
Principles of fiscal law
1. The neutrality of taxation
Through the principle of neutrality of taxation we understand the equal treatment of taxpayers in terms
of proper regulation, both in terms of immediate effects and those which may occur in the long term. An
application of this principle can be found in art. 110-111 TFEU showing that an EU member state cannot
apply directly or indirectly to the products of other Member States any internal taxation of any kind in
excess of that imposed directly or indirectly on similar domestic products.
2. The certainty of taxation
The certainty of taxation is achieved by establishing clear legal norms that do not lead to arbitrary
interpretations and the deadlines, methods or the amount of payment which have to be precisely set for
each payer. Certainty in tax matters implies the opportunity for the taxpayer to predict with a
reasonable time in advance what will be the tax burden on his income and its business in general.
Certainty means also the simplicity of the fiscal legal norm that enables taxpayers to understand the tax
rules and all the implications and the effects it may have on their business.
3. Fair taxation
The principle of fair taxation is regulated by the Fiscal Code and it refers only to individuals, thus
expresing differentiated income taxation according to their size.
4. The efficiency of taxation
Through this principle, the Tax Code understands to ensure the long term stability of the tax code so
that these provisions do not lead to adverse retroactive effect which may affect natural or legal persons
in relation to taxation on the date of adoption of their decisions.
The sources of the fiscal law
1. Primary sources:
The Constitution
The Fiscal Code
The Fiscal Procedural Code
Orders of Finance Ministry
2. Secondary sources:
Secondary normative acts of enforcement of fiscal codes are: methodological rules, orders, instructions
and decisions.
Tax legal relation
Tax legal relations consist of taxation relations that arise:
when declaring taxes,
from their establishment
from collection of tax obligations by the methods established by the legislator
The subjects of tax legal relations are on the one hand the state by tax authorities invested with specific
achievement of tax revenue and on the other hand taxpayers represented by legal or natural persons
obliged to pay taxes and other revenues of the state budget.
The content of tax legal relation
The rights and obligations of subjects participating in tax legal relations form the content of tax legal
relation. The rights of the subjects represent tax receivables and the obligations of the subjects
represent tax liabilities.
The subject matter of tax legal relations
The subject matter of tax legal relations is established and collected at the consolidated general budget
taxes and other contributions owed by the debtors.
The administrative act
The administrative act is the act issued by the competent tax authority in the enforcement of legislation
on the establishment, modification or termination of rights and tax obligations. It shall only be issued in
writing.
The taxes covered by the fiscal code are the following
1. Corporate tax
The profit is a form of income derived from running economic activities as a result of a capital
investment. The condition that the income can be regarded as profit is that the economic activity to be
conducted in order to get a benefit.
The standard rate of corporate tax is 16%.
2. Tax on income
The income tax applies to the following income:
a) in the case of Romanian natural persons resident, domiciled in Romania, to the income derived from
any source, both from Romania and from abroad;
b) in the case of resident individuals, other than those referred to a),to the income derived from any
source, both from Romania and from abroad, starting with January 1 of year following the year in which
they are resident in Romania;
c) in the case of non-resident individuals, self-employed through a permanent establishment in
Romania, to the net income attributable to the permanent establishment;
d) in the case of non-resident individuals that carry out dependent activities in Romania, to the net
salary income from these dependent activities;
e) in the case of non-resident individuals who receive income under Art. 39 d)) From the Fiscal Code, to
the income determined under the rules provided in this title, which correspond to the respective
category of income.
The categories of income, subject to income tax are:
a) income from independent activities;
b) income from wages;
c) revenues from rental and leasing;
d) Income from investments;
e) retirement income;
f) income from agriculture, forestry and fisheries;
g) income from prizes and gambling;
h) income from transfer of property;
i) income from other sources.
The tax rate is 16%.
3. Tax on microentreprise
A microenterprise is a Romanian legal entity which meets the following conditions:
derives income
earned income that does not exceed the equivalent in RON of EUR 65,000
its share capital is held by persons other than state and local authorities.
It is not in the procedure of dissolution or in liquidation, registered in the trade register or to
the courts, according to the law.
This type of income is mandatory. The tax rate is 3%.
4. Tax incomes obtained from Romania by non-residents
Non-residents who derive taxable income from Romania have the obligation to pay tax.
5. VAT
Value added tax is an indirect tax owed to the state budget. VAT is a tax that is calculated monthly based
on the difference between the VAT on taxable transactions and VAT on purchases of goods and services
by the person who owes VAT.
VAT tax period is the calendar month. The legal principle is that the chargeable event occurs and the tax
becomes chargeable on the date of delivery of goods or rendering of services. Chargeable event and
chargeability are simultaneous, but there are exceptions as well.
The standard rate of value added tax is 24%. The reduced rate of value added tax is 9% and is applicable
as an exception to different categories of goods. VAT is due with the submission of monthly VAT
statement, until the 25th of the month following the month for which the VAT was calculated. Any
person liable to pay value added tax is responsible for the correct calculation and payment at the legal
term of value added tax to the state budget and for submission at the legal term of the returns of VAT to
the tax authorities.
6. Excise
Excise duties are consume taxes applied to production and marketing of certain products. There are 3
categories of taxes:
harmonized excises special consume taxes that are payable to the state budget for these
products from domestic production or import: alcohol and alcoholic beverages, tobacco, energy
products and electricity
excise tax payable to the following products: coffee, natural fur garments, crystal items,
jewelry of gold and / or platinum, perfumery, hunting guns and weapons of individual use,
yachts and boats with or without engine for pleasure etc
tax on crude oil from domestic production. For crude oil from domestic production, economic
operators authorized by law owes tax to state budget at the time of delivery. Tax due for oil is 4
euros / tonne.
7. Local taxes and fees
The local taxes and fees are the following:
Tax on buildings
tax on land
fees on vehicles
fees for the issuance of certificates, permits and authorizations
Fees for using means of advertising and publicity
tax on shows
hotel fee
special fees
other local fees.