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The paper presents some key elements regarding the way in which real estate investments are reflected in accounting. In this regard, the theoretical aspects are illustrated by some practical examples, in an attempt to capture the specific of operations related to the recognition in accounting of real estate investments.
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The tax opinion seeks to establish the tax implications – concerning the VAT and the tax deductibility on expenses from the taxable base of profit – in the case of goods/merchandise such as stocks of food products to be removed from the inventory management system, either due to the completion of expiry term in the immediately following period or as a result of the recent completion of the expiry term.
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The following article highlights the main changes brought to the single tax return for 2020-2021 and the main aspects that can still be improved in order to ease the taxpayer’s reporting obligations in the future. As the legislation is changing constantly, even the most proactive of taxpayers face a challenge when preparing and submitting their annual tax returns. The COVID-19 pandemic has generated new factors that need to be considered when determining one’s reporting obligations in Romania. In the same context, some facilities were introduced for certain types of income and special allowances were granted to certain professionals. Despite knowing from the beginning of the year of the deadline for submitting the single tax return and paying the tax obligations related to the income obtained during 2020, it is still unknown how the tax reduction system will work this year, given that the conditions were not yet disclosed to the taxpayer.
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To prevent any potential disputes with the fiscal authorities regarding the justification of the VAT exemption for intra-Community supplies of goods, taxpayers should pay more attention to the intra-Community transactions performed, especially regarding the obtaining the necessary supporting documents.
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To prevent any issues that entrepreneurs and beneficiaries of large projects involving construction and installations may face in practice, the International Federation of Consulting Engineers (Fédération Internationale Des Ingénieurs-Conseils – hereinafter referred to as ”FIDIC”) has created a series of standard contracts to be used as international reference models. In relation to the FIDIC Red Book model (one of the most frequently used contract models for infrastructure projects in Romania), we emphasize that if the suppliers and beneficiaries of work enter into disputes about the value of the services provided which are not settled amicably but which instead are taken to an international arbitration procedure, there may be difficulties from a VAT perspective with respect to determining the moment when it is considered that the contracted works are completed by the contractor and accepted by the beneficiary.
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Deductibility of services expenses (and especially the deductibility of intra-group charges) continues to represent a hot topic during tax inspections. Services expenses have implications at the level of the corporate income tax as well as the withholding tax (e.g. undocumented artificial services, case in which the provisions of the double tax treaties cannot be applied and a withholding tax rate of 16% is applicable or even 50%, if there are not instruments for exchanging information with the service provider’s state of residence) but also from the VAT perspective (the services are not related to taxable operations and the VAT is non-deductible). It is also very important to note that criminal implications may arise in cases of tax evasion.
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There are three pillars of NAFA s digitization strategy, three interdependent tools which will help the Tax Office to strengthen the collection, by seeing in almost real time the receipts and identify the anomalies: xash registers, SAF-T and e-invoicing. In Romania, the tax administration has been working for some time on the implementation and connection of electronic cash registers, which would allow real-time reporting to the tax authorities pieces of information on sales. After several successive postponements of the application deadlines, NAFA aims to connect until November 30, 2021 including the electronic fiscal cash registers owned by small and medium operators, not only the large taxpayers. Subsequently, the connection will be made at the time of taxation. After the SAF-T s implementation, a pilot project is announced for this summer, and the e-invoice, announced for early 2022, NAFA will be able to put together the information reported by taxpayers and cross-reference the information. In this way, NAFA will be able to detected in real time the fraud and to act to stop it, actions that will increase the level of compliance. In the short term, I estimate that the transition to SAF-T will generate complexity for the business environment. Companies should already think about the technical aspects related to the adaptation of the IT solutions used to provide the requested data, but also the way they will communicate them to ANAF. Firms should also review internally how they identify their transactions from a tax point of view in order to detect possible errors in the application of tax treatment, which would obviously be desirable to correct before reporting. At the same time, in the medium and long term, SAF-T should facilitate the fiscal control procedure, both for NAFA and for taxpayers.
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This article highlights the ways of using business intelligence tools in the field of transfer pricing, but also some advantages and aspects that must be taken into account in using such tools.
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This article sets out relevant aspects of the private creditor test, as developed in the case law of the Court of Justice of the European Union, as well as various cases in which it was implemented in national law, with examples of this principle applied in Romanian judicial practice.
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In the light of recent case law of the High Court of Cassation and Justice, the extremely broad limits of the tax authority’s assessment of the reclassification of a legal transaction and the adjustment of its tax effects are being reconsolidated. The article aims to analyze a recently resolved case in which a sale-purchase transaction has been reclassified as dividend distribution.
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Almost never made public, the legislative measures took during the COVID-19 pandemic, which changed the course of tax prescriptions, have significant implications on taxpayers, who benefit from the effects of the limitation. Thus, the tax limitation period, having the nature of a limitation period, releases taxpayers from fiscal responsibility. Following the measures we will discuss in this article, the release does not occur after 5 years anymore, but after almost 7 years. Just how justified the measures were, you will find out below.
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The fiscal body performs risk analyzes, based on which it will select thetaxpayers to be audited.
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According to all analysts, the recovery of the world economy will continue post Covid-19 pandemic with all the existing obstacles. As for the European Union, its economy will continue to face the twin challenges of controlling inflation and reducing budget support. On inflation, central banks should already have experience in managing inflation and be able to mobilise quickly and flexibly. By contrast, the abandonment of emergency measures adopted by governments to support their economies is a complex and far-reaching undertaking. In addition to this double challenge there are also some risks to the pace of growth. It is primarily about state intervention in the event of new waves of the virus or other major shocks. Under these circumstances, the IMF’s fear is that economic growth in developed countries will stabilise at around 1% at the end of 2022, compared with the 2%-3% level currently forecast. Governments cannot implement tax policy in support of taxpayers because they do not have sufficient resources. However, according to the European Central Bank (ECB), while market interest rates have continued to rise, financing conditions remain generally favourable for businesses, households and the public sector, which is key to continued economic growth and to countering the negative effects of the pandemic on the path of inflation. The ECB expects that favourable financing conditions can also be maintained in the fourth quarter of 2021, admittedly with a slightly lower rate of net asset purchases under the pandemic emergency purchase programme (PEPP) compared to the second and third quarters. The ECB also mentioned some influencing factors, namely the level of key interest rates, indications of their likely future direction (forward guidance), asset purchase programme (APP) purchases, reinvestment policies and long-term financing operations. The ECB says it is ready to adjust all its instruments to ensure that inflation stabilises at its 2% medium-term objective. If they fail, governments risk once again ending up with sluggish growth as after the 2008 global financial crisis.
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In the course of the standardization of the group structures and with the primary goal of further consolidating and increasing business success in the Romanian market segment, all client’s contracts (basically sales functions relating to Romanian market) are often transferred as a whole from the non-resident headquarter of a group to the Romanian company (in practice, the Romanian company is in most cases newly founded). In relation to the headquarter, the Romanian company gain after such transfer the comprehensive right to act independently and on its own account in the Romanian market, in particular to supply existing customers and acquire new business. From such a transfer, a big concern encountered in practice seems to be the depreciation of the client’s contracts for fiscal purposes at the level of the Romanian company.
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The current article is exhibiting a summary of the existing measures initiated by the OECD and by European Union for fighting against tax avoidance and the reasons that ultimately led to failure all the measures that were implemented in past. Also, this article explains the main aspects included in the OECD plan to restructure the international taxation through Pillar I that addresses the issue of digital economy taxation and, respectively, through Pillar II that addresses the issue of global minimum tax.
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The paper aims to present the novelty issues brought by the Order of the Minister of Finance for amending and supplementing the accounting regulations applicable to economic operators no. 1239/04.10.2021 regarding the additional non-financial information to be reported by the entities required to prepare the non-financial statement.
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The national legal provisions seem to require quite clearly a separate and independent analysis of the conditions for deductibility of expenditure and VAT on purchases. As far as factual argumentation is concerned, in practice there are situations where tax authorities use the same argumentation for both taxes. The article aims to help clarify the independence but also the interdependence of the arguments that can be used, as both aspects seem to be relative. It also examines aspects of the substantive condition for the deduction of VAT for purchases which are not direct expenditure from an accounting law perspective. In this article we will not be able to give a clear-cut answer to the question in the title, but we will try to bring to the readers’ attention some concrete situations that will give them the opportunity to reflect on this topic.
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Private healthcare systems heading towards becoming the rule rather than the alternative to public healthcare system for individuals with medium-to-high income. Where there is potential, there is also room for new business models. In addition to private hospitals, clinics and other authorized providers, agents have been involved lately in intermediation of private medical services. As far as the tax law seemingly provides a formal requirement of authorization in order to exempt medical services from VAT, it is questionable whether such agents could claim relief based on the fact that the underlying service providers are authorized for medical services.
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