Introduction
In recent times, the Romanian government has taken significant steps to reform the tax system in order to enhance fiscal discipline, combat tax evasion, and optimize budgetary expenditures. One such initiative is the passing of Law 296/2023, which introduces a range of important changes to the Tax Code. The implementation of these measures will have a significant impact on various sectors, including IT, construction, agriculture, and more. This article aims to provide a comprehensive overview of the key tax measures introduced by Law 296/2023 and their implications.
Regime Changes for IT, Agriculture, and Construction Sectors
One of the notable changes brought about by Law 296/2023 is the uniformization of the tax regime for salaries in the IT, agriculture, and construction sectors. The government has taken the responsibility to ensure that employees in the IT sector also pay taxes on incomes exceeding 10,000 lei. Additionally, workers in the construction and agro-food sectors will now be subject to healthcare contributions. These changes are set to take effect from November 2023 onwards, providing a level playing field for employees across these sectors.
Introducing the e-Seal System for Enhanced Transport Monitoring
The introduction of the e-Seal system is a significant step towards improving the traceability of road freight transport. While the existing e-Transport system focuses on monitoring fiscally risky goods, the e-Seal system aims to track the movement of goods along roadways and detect potential instances of diversion. This system will help combat black market activities and ensure compliance with transportation regulations. Although the e-Seal system will theoretically come into effect within 15 days of Law 296/2023’s publication, additional implementation guidelines are required before its practical application.
Elimination of Reduced Payment Benefits for Certain Fines
Under the new legislation, fines imposed under major acts such as the Tax Code, Tax Procedure Code, Accounting Law, Cash Register Ordinance, and Cash Operations Law will no longer be subject to reduced payments within 15 days. The purpose of this change is to encourage voluntary compliance and strengthen fiscal and financial accounting discipline among taxpayers.
Stricter Penalties for Unjustified Sums in Commercial Transactions
Law 296/2023 introduces stricter penalties for traders and service providers who fail to issue or issue lower-value fiscal receipts compared to the actual sale price. Additionally, individuals and legal entities involved in cash movements without proper documentation will face increased scrutiny from the tax authorities. These measures aim to combat economic illicit activities and reinforce economic and financial discipline.
Drastic Reduction in Cash Transaction Thresholds
The new legislation significantly reduces the cash transaction thresholds that businesses must adhere to when making or accepting cash payments. The thresholds are generally reduced by 80%, and cash balances held by companies cannot exceed 50,000 lei at the end of each day. These changes aim to promote the use of electronic payment methods and discourage excessive reliance on cash transactions.
Strengthening Registration and Documentation Requirements
To address gaps in legislation that arose three years ago, the Ministry of Finance proposes several measures to combat illegal economic activities and enhance economic discipline. These measures include imposing fines and asset confiscation for individuals and companies engaged in economic activities without proper fiscal registration or documentation of their assets.
Timely Reporting of Taxpayer Assets to the Tax Authority
Local authorities are now obliged to periodically exchange data with the tax authorities regarding the assets held by taxpayers. However, prior to Law 296/2023, there were no specific deadlines for this data exchange. The new legislation aims to establish concrete timelines for this activity, ensuring effective communication between local authorities and the tax authority.
Amendments to Company Law
The proposed amendments to the Company Law grant the National Trade Register Office (ONRC) the authority to postpone the dissolution of companies until their outstanding debts are settled with the tax authorities. This measure provides companies with an opportunity to rectify their tax liabilities before facing dissolution.
Mandatory Implementation of e-Invoicing
Starting from January 2024, the e-Invoicing system will become mandatory for business-to-business (B2B) transactions. The system will be extended to all taxable persons established in Romania, regardless of their VAT registration status, for all transactions that take place within the country. However, certain exceptions will apply. This digitalization initiative aims to streamline invoicing processes, reduce paperwork, and enhance tax compliance.
Special Taxation Rules for Banks and Large Businesses
Law 296/2023 introduces an additional tax on turnover for banks and companies operating in the oil and gas sector. Companies with a turnover exceeding 50 million euros in the previous year will be subject to a minimum tax based on their turnover. The tax rate for banks will start at 2% for the first two years (2024-2025) and reduce to 1% from January 1, 2026. Similarly, the oil and gas industry will be subject to an additional tax of 0.5% based on turnover.
Reinstating the Two-Tier Tax System for Microenterprises
From January 2024, the microenterprise tax regime will revert to a two-tier system, with different rates and conditions compared to the previous framework. Microenterprises with revenues up to a maximum of 60,000 euros, excluding certain sectors such as software development, HoReCa, legal services, and healthcare, will be subject to a 1% tax rate. This change aims to support small businesses and promote entrepreneurship.
Separate Social Security Contributions for Independent Activities
Under Law 296/2023, social security contributions for independent activities will be applied separately to income ranging from six to sixty times the minimum gross wage. This change will be implemented gradually, and its impact on self-employed individuals and professionals will be felt from 2025 onwards. Additionally, the legislation proposes the taxation of meal vouchers and holiday vouchers at a rate of 10% for employees.
Adjustments to Value Added Tax (VAT)
The new legislation brings about various changes in the VAT regime, including shifting certain operations from reduced rates to the standard rate and increasing the rate from 5% to 9% for specific transactions. Moreover, significant modifications are introduced regarding VAT on housing, and some existing exemptions may be restricted. However, individuals who make advance payments for housing before the end of this year can still benefit from the 5% VAT rate.
Reduction in Vacation Vouchers for Public Sector Employees
Over the next two years, public sector employees will receive reduced-value vacation vouchers. This measure aims to optimize budgetary expenditures while ensuring that employees continue to enjoy certain benefits.
Conclusion
Law 296/2023 introduces a range of tax measures that will have a profound impact on various sectors and taxpayers in Romania. From changes in tax regimes to the implementation of digital invoicing and enhanced monitoring systems, these measures aim to promote fiscal discipline, combat tax evasion, and optimize budgetary expenditures. It is crucial for businesses and individuals to familiarize themselves with these changes and ensure compliance with the new requirements. By doing so, they can navigate the evolving tax landscape and contribute to the growth and stability of the Romanian economy.
Note: The text is valid as of its publication date, it is for informational purposes only, and represents an interpretation by the specialists at Cont Consulting. It is not intended to replace current legal provisions. We are not responsible for any damages caused by the use of this material for legal purposes or as evidence in any potential litigation.
