Summary of the proposed amendments regarding ICAS according to the draft Ordinance initiated by the Ministry of Finance:
Background:
The draft proposes to amend and supplement Law No. 227/2015 (Tax Code) in order to adjust the regulations on the specific turnover tax (ICAS), in particular for taxpayers active in the wholesale/retail of fuels and related products sectors.
Objectives:
- Reduce tax burden and compliance costs for taxpayers.
- Clarify and adapt the rules to the specificities of activities in the oil and gas sectors.
- Prevent the risk of non-payment of specific turnover tax.
Main changes proposed:
- Establishment of CAEN codes by law:
The targeted CAEN codes will be clearly defined in the legislation for the activities of trade in fuels and related products.
The application of ICAS will be extended to foreign legal persons supplying goods or services in Romania.
- Rules for foreign legal entities without permanent establishment in Romania:
It is proposed to introduce an obligation to provide a financial guarantee of EUR 1 million for foreign persons in the oil and gas sectors, similar to the regulations in the energy sector (e.g. GEO no. 119/2022).
- Exclusion from ICAS:
Taxpayers carrying out activities according to CAEN codes 4671, 4681 and 4730 may be excluded from ICAS, under certain conditions.
- Establishing regulated activities:
Legal entities that have as their main or secondary activity CAEN codes related to oil and gas, but do not actually carry out activities in these sectors, will not be required to pay ICAS.
- Changes in the exclusion from paying ICAS:
The term “exclusively” is removed in the definition of exclusions, and taxpayers in the distribution, supply or transportation of natural gas may benefit from the exclusion if they derive at least 95% of their income from activities regulated/licensed by ANRE.
- Taxation of newly established legal entities:
Introduction of specific rules for taxpayers starting or ceasing activities during the tax year.
- Clarifications on tax treatment:
ICAS do not fall under double tax treaties.
- Deadlines for declaration and payment:
Foreign legal entities that do not have a permanent establishment will calculate, declare and pay ICAS for the fourth quarter by the 25th of the following month, inclusive.
Impact and justification:
The amendments are justified by:
- The need to harmonize tax legislation with practices in the oil and gas sectors.
- To reduce compliance costs for taxpayers operating in these industries.
- Increased certainty of tax collection, especially for foreign taxpayers.
These measures aim to optimize the tax system and ensure better tax administration for taxpayers in strategic sectors.