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Working procedure for annual corporate income tax with advance payments

2023-10-23 07:33:51

Important provisions relating to annual income tax with advance payments.

Taxpayers can opt for the calculation, declaration, and payment of the annual profit tax, with advance payments, made quarterly.

The deadline by which the annual tax is paid is the deadline for filing the profit tax return, namely March 25 of the following year inclusive.

The option for the annual system of declaration and payment of the profit tax is carried out at the beginning of the fiscal year for which the application of the annual system is requested. This is mandatory for at least 2 consecutive fiscal years.

Exit from the annual tax declaration and payment system is carried out at the beginning of the fiscal year for which the application of the annual system is requested.

Taxpayers must notify the competent tax authorities of the change to the annual/quarterly system of declaration and payment of profit tax by January 31 inclusive of the respective fiscal year by submitting Form 700.Order no. 4136/2020 made changes to OPANAF no. 3725/2017 for the approval of the tax registration forms of taxpayers and the types of tax obligations that form the tax vector.

Starting with the year 2021, for the modification of the annual/quarterly system of declaring and paying the profit tax, F012 is NOT sent anymore. By OPANAF 4136/2020 this information is included in Declaration 700.

 

The following, cannot opt for the annual system of declaration and payment of profit tax:

1. Taxpayers who:

a) were newly established, with the exception of newly established taxpayers as a result of some reorganization operations carried out according to the law;

b) they recorded a fiscal loss or did not owe annual profit tax;

c) they were temporarily inactive or declared on their own responsibility that they do not carry out activities at the registered office/secondary offices, situations registered, according to the legal provisions, in the Trade Register or in the court register;

d) were taxpayers on the income of micro-enterprises.

 

2. Institutions:

a) of credit - Romanian legal entities and their branches in Romania;

b) foreign legal entities;     

c) religious cults;

d) pre-university education units and higher education institutions, private, accredited, as well as authorized ones;

e) associations of owners established as legal entities and associations of tenants recognized as ownership associations;

f) National Red Cross Society of Romania;

g) non-profit organizations, trade union organizations, employers' organizations;

h) foreign legal entities that earn income from the transfer of real estate properties located in Romania or of any rights related to these properties, including the rental or assignment of the use of real estate assets located in Romania, income from the exploitation of natural resources located in Romania, as well as income from the sale-assignment of participation titles held in a Romanian legal entity;

i) taxpayers who obtain most of the income from the cultivation of cereals, technical plants and potatoes, fruit growing and viticulture.

 

Work procedure

  • taxpayers who apply the annual profit tax declaration and payment system, with quarterly advance payments, determine the quarterly advance payments in the amount of one fourth of the profit tax due for the previous year, updated with the consumer price index, estimated on the occasion of the elaboration of the initial budget of the year for which the advance payments are made, up to and including the 25th of the month following the quarter for which the payment is made, with the exception of the advance payment related to the Q4 which is declared and paid by December 25, respectively until the 25th of the last month of the amended fiscal year;
  • taxpayers who fall under the provisions of art. 16 para. (5) update the quarterly advance payments with the last consumer price index communicated for the year in which the modified fiscal year begins. The profit tax for the previous year, based on which the quarterly advance payments are determined, is the annual profit tax, according to the profit tax declaration. These provisions do not apply to taxpayers who are dissolved by liquidation, for the period between the first day of the fiscal year following the one in which the liquidation procedure was opened and the date of closing the liquidation procedure (art. 41 paragraph 8 Fiscal Code).

 

By exception to the provisions of art. 41 para. (8), taxpayers who declare and pay the annual profit tax, with advance payments, and who fall under the provisions of art. I from the Government Emergency Ordinance no. 153/2020 for the establishment of fiscal measures to stimulate the maintenance/increase of own capital, as well as for the completion of normative acts, make the advance payment for the first quarter of each fiscal year/modified fiscal year at the level of the amount resulting from the application of the tax rate on profit accountant of the period for which the advance payment is made, up to and including the 25th of the month following the first quarter.

This rule is also applicable for taxpayers who are in the second year of the mandatory period provided for in art. 41 para. (3). The application of the advance payment calculation rule for the first quarter begins with fiscal year 2022, respectively with the modified fiscal year that begins in 2022, and ends with fiscal year 2026, respectively with the modified fiscal year that begins in 2026, as the case may be.

 

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