Fiscal sprint: New taxes hump micro-enterprises

The new fiscal measures bring additional responsibilities and costs to companies, Florina Mateescu, founder of Perfect Accounting, expert accountant and member of the Romanian Chartered Accountants and Certified Public Accountants (CECCAR) since 2005, told us.

The specialist told us: "According to Law 296/2023 regarding some fiscal and budgetary measures to ensure Romania's long-term financial sustainability, published last week in the Official Gazette, we will have some major changes in the way companies work, with an impact starting from the first day of the next fiscal year, but which will most likely be felt at the end of the first quarter of next year. Unfortunately, these changes bring not only a change at the level of processes, but especially new responsibilities and costs for companies".

Although the impact of the legislative changes will be felt by the entire business environment and even by the population, Florina Mateescu is of the opinion that the most affected will be small and medium-sized companies, through the increase of taxes that will have the immediate effect of reducing profitability, and in the medium term , of competitiveness. The number of deregistered companies increased this year, and for 2024 the trend will increase as a result of the new conditions.

"An important element for micro-enterprises is the income tax, which is increased from 1% to 3%, practically we have a tripling of the taxes paid. This expenditure on taxes, combined with the increase in the minimum wage, will be reflected in the company's budget through difficult-to-manage costs for companies that have not reached maturity and stability on the market, do not have a solid and stable client portfolio or are experiencing cashflow problems" , the quoted source told us. This draws attention to the fact that the 1% tax will be applied to micro-enterprises whose revenues are a maximum of 60,000 euros and which do not operate in specific fields such as IT, HoReCa, legal activities or health services, and the 3% tax for micro-enterprises with revenues over 60,000 euros or who carry out activities from those listed previously. In order for a company to qualify as a micro-enterprise, it must have at least one full-time employee, a condition that is preserved from the previous legal provisions.

Florina Mateescu points out: "The increase in the minimum gross salary from 3000 lei to 3300 lei, already in force, affects the companies that have more than 30 employees the most. They pay an average of 1200 euros/month, in addition to the previous situation. For the IT industry, until now there was a facility of 10% tax exemption, a reduction aimed at stimulating the local market. The elimination of this facility will also bring changes in the types of contracts that companies will have with their employees, turning them from employees with individual employment contracts into service providers with contracts as a consequence, concluded with SRL-type companies".

The law also provides for the standardization of the tax regime applicable to IT salaries with that of the construction and food industry sectors, respectively, employees will pay tax on incomes that exceed 10,000 lei. Since the law was published in the Official Gazette on October 27, these changes will apply to the income obtained in the following month, i.e. in November.

Another important change, which is related to the employed staff, is the additional imposition of meal vouchers and holiday vouchers. They will be taxed with the health contribution (CASS), at a percentage of 10%, the specialist also points out, appreciating: "All companies will try to cover the increase in taxes by increasing the final price, so the one who will suffer is the entrepreneur, the employee, but especially the consumer. Practically, the cost of living increases and the purchasing power decreases".

For about 20 years, since the first version of the Fiscal Code was published, the business environment has been constantly sounding the alarm on periodic changes that destabilize the flow of capital in the economy, because there is no legislative and fiscal predictability, said the quoted source. Since the appearance of the Fiscal Code in 2005, it has undergone 554 changes made through 107 laws and emergency ordinances.