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Taxnewsflash July 2007, Issue 139 KPMG IN ROMANIA The procedure of issuing the advance tax rulings and advance pricing agreements have been recently approved by Government Decision no. 529/2007 Services Advanced Tax Ruling According to the Fiscal Procedure Code, with further amendments, taxpayers may apply to the tax authorities in order to obtain an advance tax ruling in respect of future fiscal cases. The procedure includes among other important provisions details regarding the documentation which would need to be submitted to the National Agency of Tax Administration in order to obtain the advance tax ruling. The taxpayers are allowed to have preliminary debates with the National Agency of Tax Administration prior to submitting the documentation which may help to determine the future fiscal cases. The tariff which would be charged for releasing the advance tax ruling has been establish at 1,000 euro payable in RON at the NBR’s foreign exchange rate valid at the date of payment. It may be possible to file a single application for more than one future fiscal case subject to advance tax rulings. • • • • • • • • • • • Advanced Pricing Agreement In line with the provisions of the Fiscal Procedure Code taxpayers who carry out transactions with related parties may address to the tax authorities in order to obtain an advance pricing agreement regarding the conditions and methods of determining the transfer pricing within a given period of time. The procedure include details regarding the documentation which needs to be submitted in order to obtain the advance pricing agreement such as documents referring to the transactions carried out with related parties, proposal regarding the computation method of transfer pricing which will be used, general description of group activities, description of proposed transfer pricing methodology and criteria of selection, presentation of information regarding comparable foreign and domestic transactions, critical assumptions which may affect the transfer pricing relating to the transaction, the validity of the agreement and other. Similarly as Corporate taxation International taxation Value added tax Excises and custom duties Local taxes International executive services Individual taxation Foreign currency regulations Assistance during tax controls Forensic tax investigations Training kpmg.ro to advance tax ruling the taxpayers are allowed to discuss with the tax authorities prior to submitting the documentation. The advance pricing agreement may also be reciprocal or multilateral if it is released commonly by Romania and other states where the affiliates of the taxpayer are located. However this may be applicable only to those taxpayers who carry out transactions with affiliates domiciled in the states which concluded with Romania double tax treaties. The tariff which would be charged for releasing the advance pricing agreement has been establish from 10,000 euro up to 20,000 euro (in the case of large taxpayers as well as in the case of other categories of taxpayers of which the consolidated value of transactions exceeds 4,000,000 euro) and the tariff for amendments of an already released advance pricing agreement has been establish from 6,000 euro up to 15,000 euro (in the case of large taxpayers as well as in the case of other categories of taxpayers of which the consolidated value of transactions exceeds 4,000,000 euro) payable in RON at the NBR’s foreign exchange rate valid at the date of payment. In principle the advance pricing agreement is valid for a period of 5 years which however may be extended in the case of long term agreements. The advance price agreement is valid no more if the taxpayer does not observe its terms and conditions. The taxpayer who obtained an advance pricing agreement has the obligation to report on a yearly basis, by the filing date of the yearly financial statements within the relevant authorities, the performance of the agreement and the consolidated value of transactions carried out during the year and included in the agreement. Failure to report leads to cancellation of the advance pricing agreement. The content of the report is explained in detail in the law. If documentation in foreign language exists, then for the purpose of advance tax ruling and advance pricing agreement these should be translated and certified by authorized translators. Note importantly that both the advance tax ruling and the advance pricing agreement are valid no more if the law provisions based on which they have been released are amended. About us KPMG Romania’s Tax Department consists of more than 55 Romanian and international consultants, having command of local and international legislation, organized to be able to react at short notice to any request for tax assistance you may require. Contact details Patrick Leonard Tax Partner firstname.lastname@example.org Niculae Done Tax Partner email@example.com Ray Breden Tax Director firstname.lastname@example.org Teodora Alecu Tax Manager email@example.com KPMG Romania, Victoria Business Park, DN1 Bucuresti Ploiesti nr. 69-71 Sector 1, Bucuresti 013685, Romania P.O. Box 18 – 191 Tel: i+40 741 800 800 Fax: +40 741 800 700 E-mail: firstname.lastname@example.org Internet: www.kpmg.ro The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2007 KPMG SRL, a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania.
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