Business environment: New taxes will kill a quarter of SMEs

The business environment in our country must quickly adapt to the fiscal changes contained in law 296/2023, taking into account the fact that some of them entered into force yesterday, November 1, others will enter into force on November 11, and most the measures will be applicable from January 1, 2024. The new law was harshly criticized by the business environment and the political opposition, before and after the assumption in Parliament by the Government and before its promulgation and publication in the Official Gazette. Representatives of the business environment claim that the new tax measures will lead to the disappearance of at least 25% of SMEs from the economy, because small companies will enter losses or have a very low profit margin, which will not allow them to carry out their activity in optimal conditions. The normative act was also challenged in the Constitutional Court, but the CCR magistrates rejected all appeals and showed that it is the Government's prerogative to impose whatever tax regime it wants.

The first measure that entered into force on November 1 is that according to which employees in the IT sector will pay income tax for the amount exceeding 10,000 gross lei, they will also pay the contribution to the public health system, a contribution that will also be paid by the workers from construction, agriculture and the food industry. The introduced fiscal measure actually represents a restriction of the fiscal facilities granted in recent years to these sectors of activity, but its impact will be reduced taking into account that in the government meeting on October 31, the members of the Ciolacu Cabinet approved a normative act that increases the minimum wages in construction, agriculture and the food industry, the new value covering the loss caused by law 296/2023.

The toughest measures against the business environment will come into effect on November 11, when cash payments and receipts will be limited to the following ceilings:

- in relations between legal entities, business to business (B2B), the daily ceiling is 1,000 lei/person and 2,000 lei for cash&carry suppliers, without exceeding the amount of 2,000 lei/day;

- in the relations between legal entities and natural persons, business to consumers/clients (B2C), the ceiling is 5,000 lei/person until December 31, 2024 and 2,500 lei/person after January 1, 2025. There is no ceiling of maximum amounts payable daily to individuals, but only individual limitations. The subject of these payments are amounts representing dividends, purchases of goods and services from natural persons, debt payments or other rights.

- payments of treasury advances will be made within the limit of 1,000 lei per day for each person who receives advances for settlement.

- payments between individuals are limited to 10,000 lei per transaction until December 31, 2024 and to 5,000 lei starting from January 1, 2025.

Also from November 11, cash loans given by natural persons who have the capacity of associates/shareholders/administrators/other creditors to legal persons are prohibited; they can only be done through non-cash payment instruments. It is also forbidden to fragment transactions in order to make cash payments within the ceilings given by the new law.

• 50,000 lei - the daily ceiling for economic agents

From the same day, the cash amounts in the cash register of the companies will not be able to exceed, at the end of each day, the ceiling of 50,000 lei. The respective ceiling will be calculated for each cashier separately, if the company has several cashiers or several work points each equipped with the relevant cashier. Cash amounts that exceed the cashier's ceiling of 50,000 lei will be deposited into the respective persons' bank accounts within two working days. The only allowed exception to this ceiling is in the situation where payments of a salary nature and other personnel rights are to be made. In this case, the respective amounts can be kept in the house for a maximum of 3 working days. Also, if other payments are made to natural persons, it is allowed to exceed this ceiling, for a maximum period of 3 working days, starting from the due date for payment of these obligations. The penalty for not complying with the cash receipts/payments ceilings or exceeding the cash ceiling in the cash register is a fine of 25% of the amount that exceeds the mentioned ceilings, but not less than 500 lei.

• 2% tax on bank turnover, from January 1, 2024

From the first day of next year, January 1, 2024, minimum turnover taxes will come into force. If for the majority of companies that register turnovers of over 50 million euros annually, this tax will be 1% of that figure (there is an exception - the tax ective will not be paid by energy companies dealing exclusively with distribution), for the banking system the minimum tax will be 2% of the turnover for the years 2024 and 2025 and will decrease to 1% from the year 2026.

Starting from January 1, 2024, all B2B transactions (between legal entities) will be registered in the RO e-Invoice system and not only those regarding products with fiscal risk as it is until the end of 20233. According to the new law, economic operators - taxable persons established in Romania, for the deliveries of goods and the provision of services that take place in our country, carried out in the B2B relationship, have the obligation to send the invoices issued in the national electronic invoice system RO e-Invoice regardless of whether the recipients are registered or not in the register provided by this system. The deadline for submitting invoices in the RO e-Invoice national electronic invoice system is 5 working days from the invoice issuance date. Non-compliance with the provisions regarding RO e-Invoice constitutes a contravention and is sanctioned with a fine from 5,000 lei to 10,000 lei for large taxpayers, with a fine from 2,500 lei to 5,000 lei for medium taxpayers and with a fine from 1,000 lei to 2,500 lei, for the others legal entities, as well as for natural persons.

There is an exception: failure to comply with the obligation to submit invoices in the RO e-Invoice system between January 1 and March 31, 2024 is not penalized.

• New tax regime for micro-enterprises and PFAs

The taxation regime for micro-enterprises also changes from January 1, 2024 and will have two tax rates: 1%, for micro-enterprises with revenues not exceeding 60,000 euros inclusive, and 3%, for micro-enterprises with revenues above 60,000 euros or carrying out activities, main or secondary, corresponding to CAEN codes from IT, HoReCa, the medical field (including dentists) and legal activities (CAEN 5821, 5829, 6201, 6209, 5510, 5520, 5530, 5590, 5610, 5621, 5629, 5630, 6910, 8621, 8622, 8623, 8690).

If, during the fiscal year, the revenues achieved by a micro-enterprise exceed the level of 60,000 euros or the micro-enterprise starts to carry out activities under the CAEN codes above, starting with the quarter in which such situations are registered, the tax rate of 3%.

Regarding the taxation of authorized natural persons (PFA), from the beginning of next year, if the income of a PFA will be between 12 and 24 minimum wages in the economy, then the basis for calculating the CAS contribution cannot be less than 12 minimum wages , and if the income is higher than 24 minimum wages then CAS will be paid at the equivalent of 24 minimum wages per economy. Starting from 2024, the CASS payment will become a deductible expense in the case of PFAs, but its calculation base is separated from the calculation base of other types of income such as those from investments, rents, etc.. CASS will be calculated in in the case of PFAs at the realized net income which cannot be lower than the ceiling of 6 minimum salaries per economy and a maximum of 60 salaries.

Another fiscal measure that comes into force at the beginning of next year is that which provides that employees will pay the contribution to the public health system for meal vouchers, gift vouchers and holiday vouchers.

At the same time, from January 1, 2024, the VAT increases to 9% for tickets to shows, concerts, cultural and sports events, the delivery of social housing, photovoltaic panels. Moreover, VAT is increased from 9% to 19% on the supply of non-alcoholic beer and foods with added sugar, whose total sugar content is at least 10 grams per 100 grams of product.

The second half of next year is also not without the entry into force of new fiscal provisions. Thus, from July 1, 2024, any income found by the tax authorities as not having an identified source of provenance will be taxed at 70%.

Also from the first day of the second semester of 2024, according to representatives of ANAF and the Romanian Customs Authority, the RO e-Seal system provided for by the new tax law would be operationalized. This system is necessary to monitor the traceability of goods in transit in our country and of imported goods whose recipients are economic agents from Romania. The entire necessary infrastructure, including electronic seals, will be procured by the Ministry of Finance in the first part of next year. The RO e-Seal system is adapted from the one existing in Poland, but unlike the one in that country which is managed only by the customs authority, here it will be managed by ANAF and the Customs Authority. The procedure regarding the RO e-Seal system should be adopted by Joint Order of the presidents of ANAF and AVR within a maximum of 60 days from September 27, until the deadline of 26 December, taking into account that October has 31 days.