Tax on incomes from dividends, including those derived from shares in closed-end investment funds distributed as of the beginning of the fiscal year of 2005, is to be calculated and deducted through the levying of a 10% tax on the amount of income.
This is what the draft government decision says that was adopted by the new government at the end of 2004 in order to endorse the enforcement guidelines for the ordinance modifying the Fiscal Code.
The normative act was signed by finance minister Ionut Popescu on Wednesday evening and was on the agenda of the government session yesterday.
Fiscal experts believe this was the only possible interpretation of the law in the absence of enforcement guidelines, since dividends fall into the category of income from which taxes are deducted upon disbursement, regardless of the date the income was made.
In effect, dividends in 2004 could be disbursed at any time during 2005, or even in 2006, depending on the decisions of shareholders from different companies.
Given the shift from the 5% to 10% tax, some tax consultants are recommending the introduction of transitory provisions to help smooth the transition between the different levels of tax. However, this would only have been possible through the ordinance to modify the Fiscal Code.
Despite this the State Minister charged with co-ordinating economic activities, Adriean Videanu, said at a meeting with representatives of the business environment on Wednesday that dividends made by individuals in FY2004 would only be taxed at 5%, as in the previous year, and that the provision for this would be included in the guidelines of the Fiscal Code.
"Since the profit was made in 2004, we are trying to rectify this problem created by the tax on dividends through guidelines, and we will fix it," said Videanu during a conference organised by FinMedia. The head of the Senate's budget-finance committee, Varujan Vosganian, jumped to his rescue saying, "this would create retroactivity, which is not within the spirit of the law". Tax consultant Gabriel Biris, on the other hand, explained that it was precisely within the spirit of the law to demand that the 10% tax be levied on 2004 dividends disbursed in 2005.
Experts are unanimous in their believe that including a provision for maintaining the 5% tax on FY2004 dividends will be of no relevance in terms of legal rigour. "The guidelines can not run against the principle included in the law. The modification can only be made by amending the ordinance when it is debated by Parliament," a legal consultant says.
razvan.voican@zf.ro
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