In order to stimulate the improvement of the equity capital of the companies, the Emergency Ordinance 153/2020 was published, which provides for the granting of percentage reductions in the payment of income or profit tax to companies that have positive equity capital, as follows:
a) reduction of 2%, if the equity capital presented in the annual financial statements, in the year for which it owes the tax, is positive;
b) if the adjusted equity registers an increase compared to the adjusted equity capital recorded in the previous year and the condition of letter a is met, the discounts shall have the following amounts:
It should be noted that here we are talking about adjusted equity, so not accounting equity, as used in point a).
Adjusted equity comprises the following items: subscribed and paid-up share capital, asset accounts, capital premiums, legal reserve, statutory reserve and other reserves consisting of profit and retained earnings, not including revaluation reserves and profit or loss for the current year.
These provisions entered into force on 01.01.2021 and will be applied for the calculation of the corporate / income tax for the period 2021-2025.
The procedure by which companies benefit from facilities is as follows:
a) for corporate tax payers, the percentage related to the tax reduction shall be applied to the corporate tax of the year in which the mentioned conditions are met, and the amount of the reduction shall be deducted from it in the Annual Declaration on profit tax.
b) for microenterprise income tax payers, the percentage related to the tax reduction shall be applied to the tax due for the entire fiscal year. The amount of the reduction shall be deducted from the tax for the fourth quarter.
In order to allow the calculation and application of these facilities through which companies can benefit from significant reductions in corporate or income tax, the deadline for submitting returns on these taxes is June 25, inclusive, of the following year.
Tax incentives aimed at stimulating the capitalization of companies may become unenforceable due to the non-fulfilment of the award criteria. Now is the most appropriate time to analyze the company's equity and take the necessary measures to improve them, one of these measures being the contribution in kind.
The contribution in kind to the capital of a company may consist of movable assets (machinery, machinery, materials, goods, etc.), real estate (land, buildings, installations, etc.) or intangible assets (trade fund, patents, etc.).
The contribution can be made by transferring the property right or by transmitting the right to use it. In both cases, the goods brought as a contribution in kind will have to be revalued by an authorized valuer, and the value by which the share capital will be increased will be the one entered in the valuation report.
With over 17 years of experience in valuation, FairValue has a strong team of experts in accounting, finance, fixed assets and intellectual property. The over 60 evaluators across the country, who make up the #fairvalueteam, are ready to respond promptly to any valuation request in the field of financial reporting, regardless of its complexity and the location of the assets in Romania.
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