|TaxHouse, Taxand Romania|
|Transfer Pricing Services|
Political discord and public protests have troubled Romania over the past couple of years. The ruling Social Democratic Party ousted Sorin Grindeanu in June 2017, following a vote of no-confidence after only six months of serving as the country's prime minister. Once in office, incumbent Prime Minister Mihai Tudose quickly shelved an unpopular business tax reform of replacing a flat corporate tax of 16% with a tax on turnover. However, he did warn that the tax authority would keep a close eye on companies that haven't declared any profit for decades.
"With the recent elections, transfer pricing has become a key point in politicians' political agendas," said Angela Rosca, managing partner of Taxhouse, Taxand. "There are increasingly aggressive attitudes towards multinationals, and the words politicians use [when discussing multinationals] are pretty offensive to be honest. They scare people away."
"We will see more adjustments with regards to multinationals, who will be under more attack than local companies and this trend will continue. Litigation will become more and more important in terms of consultant activity," Rosca said.
Despite concerns over the country's political stability, Romania has experienced significant economic growth, with GDP growth projected at 4.3% for 2017 by the European Commission. The country is also steadfastly going through the motions of adopting the OECD's guidelines on BEPS.
Country-by-country reporting (CbCR) was legislated in June 2017. Entities which are obliged to submit CbCR are those with total revenues equal to or higher than €750 million ($884 million) in the last financial reporting year from January 2016.
Corporations must report the following information: turnover, income and loss before corporate tax, income tax paid and accumulated, declared capital, undistributed profit, number of employees, tangible fixed assets, and details of integral entities of the group including jurisdiction of tax residence and principal economic motions conducted.
The deadline for TP documentation is in line with the Romanian corporate income tax declaration date on March 25.
"There is more pressure on our team to deliver TP filing on an urgent basis," said Rosca. "Unfortunately, although all consultants have tried to educate the market to prepare these in advance, many taxpayers have not done that. It is tough, especially keeping to the deadlines. Not all corporations complied with the [previous deadline] on March 25."
Entities and taxpayers whose transactions do not satisfy the minimum threshold are not required to prepare documentation annually, but may have to do so upon written request from authorities with a timeframe between 30 to 60 days, with a potential 30-day extension if they request it.
(As of July 2017)
|Capital gains tax||0/16% (a)|
|Royalties from patents and licences||16% (c)|
|Branch remittance tax||n.a.|
Net operating losses (years)
|Carryforward||7 years (d)|
Source: Taxhouse, Taxand Romania and Deloitte