MSMEs will not pay taxes on profits undistributed as dividends

07.12.2022 17:18
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The micro-, small and medium-sized enterprises will benefit from a three-year fiscal vacation on the payment of the income tax on entrepreneurial activity until the given incomes are distributed for paying dividends. The new taxation concept is stipulated in the draft budgetary-fiscal policy for 2023 that was approved by the Cabinet on Wednesday, IPN reports.

Under the draft, the given enterprises in 2023-2025 will pay a 0% tax rate on profits that are not distributed in the form of dividends. When dividends are paid out, the business entities will pay a tax rate of 12% of the income allocated for paying dividends and will ensure the withholding of a tax of 6% of the distributed dividends.

Minister of Finance Dumitru Budianschi said that a mechanism for refunding the VAT that accumulated in the account will start to be implemented on January 1, 2023 given that the current system creates financial difficulties for enterprises. At present, the business entities that do not have the status of exporter do not have the right to be refunded the VAT accumulated in the account. The new concept envisions the refunding of VAT to business entities registered as VAT taxpayers that will accumulate VAT sums for deduction.

Also, the period during which trade based on patent is possible was extended from December 31, 2022 until July 2023.

The excise duties on tobacco products will rise by 25%, while on alcohol by 15%.

According to the minister, all the measures have a cost and new provisions were introduced in order to offset the loss of revenues due to these measures. Among these is the reintroduction of progressive taxation of incomes of private individuals by applying the tax rates of 12% and 18%. The tax rate of 12% will be applied for the annual taxable income that does not exceed 1 million lei, while the tax rate of 18% – for the annual taxable income that exceeds 1 million lei. Resident private individuals with an annual taxable income lower than 360,000 lei will keep the right to reduce the obtained annual taxable income by the value of the personal exemption.