The Fiscal Code that entered into effect on January 1, 2004 has been modified and completed by an emergency ordinance passed in a government meeting. The new stipulations will be applied as of January 1, 2005. In the meantime, the ordinance will be debated by Parliament and the Ministry of Finance will have to issue updated methodological norms, by collecting and ordering all of the current regulations.
Next year, corporate profit tax will drop from 25% to 19%, whereas dividend tax is to remain at 10%. According to the original draft, tax on dividends was supposed to go up 5% in the case of companies, to 15%. Eventually, the Exchequer decided to settle for doubling the tax on dividends obtained by natural persons, from 5% to 10%. Also, the minimum income tax quota will go down from 18% to 14%, and the maximum quota will be cut from 40% to 38%. The middle income tax band will be 26%.
The deduction for provisions made for receivables that are not cashed when they mature will go up from 20% to 25%, with the cap to go up to 30% as of January 1, 2006.
Also, expenses connected to the obtaining of revenues, which are profit tax deductible, will also explicitly include contributions to the security fund for work-related accidents and professional diseases, as well as premiums for insurance against professional risk.
Moreover, profit will no longer be a condition for the deduction of expenses related to marketing, market promotion, participation in fairs and exhibitions, and the publication of a company's own information materials.
razvan.voican@zf.ro
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