S.C. X S.A. has as its object of activity “Manufacture of tubes, pipes, hollow profiles and tube or pipe fittings, of steel”, CAEN code 2420.
Period audited: 01.01.2017 – 31.12.2021.
The main findings of the tax inspection authorities were:
With regard to corporate income tax, a difference in the amount of x lei was established as follows:
- the audited company purchased services on a commission basis from affiliated agents, which consisted of intermediation services in the commercial relationship between the company and third party customers, with the purpose of facilitating sales. Following the analysis of the transfer pricing records for the audited period, it was found that the 50% percentage of allocation of X E’s generated costs to S.C. X S.A. is unjustified, given that X E also carried out other activities with significant values to other affiliates or third parties during the audited period, namely resale of goods belonging to Group X, resale of finished products to Group X and resale of raw materials and materials;
- the tax inspection authorities established the median value (central market trend) as the transfer price at market price and proceeded accordingly to adjust the operating income realized in transactions with affiliated companies, thus determining an additional operating income when calculating the taxable profit for 2018 in the amount of x lei;
- it was found that, by recording in the accounting records invoices issued by company Y, representing consultancy services, without proving that they were necessary and performed for the purpose of economic activity, operating expenses were increased by a total amount of x lei;
- it was found that, by recording in the accounting records the invoice issued by the company X I S.R.L., representing the execution of marketing reports services performed by S.C. X I S.R.L., without proving that they were necessary and performed for the purpose of economic activity, the operating expenses of 2017 were increased by a total amount of x lei;
- expenses non-deductible for tax purposes for the calculation of corporate income tax, representing protocol expenses in the amount of x lei, the audited company not submitting supporting documents showing that they were intended for specific protocol actions.
As regards VAT, a difference in the amount of x lei was established, as follows:
- it was found that the company deducted VAT in the amount of x lei, representing consultancy services, without proving that they were intended for its taxable operations;
- it was found that the company was not entitled to deduct VAT on the invoice issued by S.C. X I S.R.L., representing the execution of marketing reports services, totaling RON x, since the services invoiced were not intended to be used for taxable operations;
- it was found that the company did not have the right to deduct VAT totaling RON x, given that this VAT related to purchases of alcoholic beverages;
- disallowing the right to deduct VAT in the amount of RON x, related to invoices issued by taxable persons established in Romania, after their registration as inactive in the Register of inactive/reactivated taxpayers.
As a result of the tax inspection, additional tax liabilities in the total amount of x lei and a loss reduction in the amount of x lei were established.
Source: ANAF