Tax inspection reports at a company whose activity is “Manufacture of paper and paperboard”

S.C. X S.A. is engaged in “Manufacture of paper and paperboard”, CAEN code 1712.

Period covered: 01.01.2016 – 31.12.2021.

The main observations of the tax inspection authorities were:

a) The taxable base for the audited period was increased by the amount of x lei, representing non-deductible expenses for tax purposes, recorded by S.C. X S.A. as expenses for services from company X in Member State X, consisting of “management/control analysis, human resources and organization, financial and treasury assistance, information technology, workplace safety assistance, supply chain, quality, marketing and sales, technical assistance and coordination, operational assistance and coordination, innovation, business control, procurement communication”.

During the audit it was found that the audited company did not justify the allocated expenditure, i.e. no documents were submitted to prove the amount of the invoices issued by company X in Member State X, i.e. the expenditure for the above mentioned departments.

Thus, the tax inspection authorities found that S.C. X S.A. had concluded a contract for the provision of services with company X of Member State X, according to which the value of the services is determined on the basis of the supplier’s costs and a certain profit margin, and the mere mention in the title of the contract of ‘subscription type’ cannot change the characteristics of the transactions carried out between the two parties;

b) The taxable base for the audited period was increased by the amount of x lei, representing the adjustment of expenses to the market price, related to purchases of goods and services made by affiliated persons, in accordance with the legal provisions;

c) At the same time, the taxable base was increased by the amount of MDL x, representing the adjustment of income at market price, related to the sales of products manufactured by the audited company to affiliated persons, in accordance with the legal provisions.

Also, as a result of the verification, it was found that S.C. X S.A. did not submit documents proving the justification of the invoicing of expenses in the amount of x lei, as intended to be used for taxable operations, VAT deducted for these operations being in the amount of x lei.