Tax changes introduced by the Act on the Measures and Actions during the State of Emergency

In this issue of KPMG Tax News for 2020, we summarize the most important changes concerning tax matters and the preparation and filing of the annual financial statements for 2019, introduced by the Act on the Measures and Actions during the State of Emergency declared by virtue of Resolution of the National Assembly dated 13 March 2020 („the Act“).

Working in time of COVID-19

The Act was finally approved by the National Assembly on 23 March 2020 after the President exercised his right to veto and returned it for further discussion and was promulgated in State Gazette on 24 March 2020.

The Act introduces special provisions concerning the application in 2020 of the Corporate Income Tax Act, the Personal Income Tax Act, the Local Taxes and Fees Act, the Tax and Social Security Procedures Code and the Accounting Act.

Corporate Income Tax Act

Deadline for declaring and payment of tax liabilities

The deadline for filing of the annual tax return under Article 92 of the Corporate Income Tax Act for 2019 and for the payment of taxes declared with it are extended until 30 June 2020.

The same deadline applies with respect to the filing of tax returns and payment of taxes related to (i) ancillary activities within the meaning of the Gambling Act, (ii) revenues of budgetary enterprises, and (iii) operation of ships.

Advance payments for corporate income tax for 2020

The approach with respect to calculation of the advance tax installments for 2020 and the due dates for their payment remain the same. The Act amends the procedure for declaring the advance tax installments which depends on the date of filing of the annual tax return for 2019, as follows:

  • If the annual tax return for 2019 was submitted before the Act came into force, advance installments will be made in the amount as declared, and if necessary, a declaration for changing the advance installments under Article 88 of Corporate Income Tax Act may be submitted under the general provisions of the law.
  • In case the annual tax return for 2019 is filed after the Act enters into force and before 15 April 2020, the advance payments will be made in the amount as declared.
  • Taxpayers who have not submitted the annual tax return for 2019 by 15 April 2020 are required to declare by that date the amount of the advance instalments for 2020 by filing an annual tax return, but completed only in the part for the calculation of the advance payments for 2020.

The advance payments declared with the annual tax return for 2019 may be changed (increased or decreased) by filing a declaration under Article 88 of Corporate Income Tax Act.

Personal Income Tax Act

The deadline for submission of the annual personal income tax return and for payment of the annual tax liability for sole merchants and the persons, who are not registered as traders but are taxed as sole merchants is extended to 30 June 2020. The persons who are entitled to use a 5% deduction from their outstanding tax liability, can utilize it if their tax return is filed and the tax is paid until 31 May 2020.

The deadline for submission of the annual tax return for all other individuals remains unchanged: 30 April 2020. Five percent deduction upon meeting the respective statutory requirements may be used until 31 March 2020.

Local Taxes and Fees Act

A discount of 5% is granted to persons who have paid the real estate tax or the vehicle tax for the whole 2020 up to 30 June 2020. The Act does not contain specific provisions regarding the payment of the garbage collection fees for 2020.

Unchanged deadlines in the tax and social security legislation

Except for the explicitly envisaged changes for 2020, the Act does not change other deadlines and procedures for establishing, declaring, filing, securing and collecting public receivables under the Tax and Social Security Procedures Code, Customs Act, Value Added Tax Act, Corporate Income Tax Act, Personal Income Tax Act, Local Taxes and Fees Act, Social Insurance Code, Health Insurance Code, and the Gambling Act.

Suspension or non-application of certain statutory terms

Until the state of emergency is lifted, certain statutory terms will cease to apply or enforcement proceedings will not be initiated, as follows:

  • The limitation period for repayment of public liabilities will cease to run for the duration of the state of emergency. Until the state of emergency is lifted, the 10-year period for repayment of public claims does not apply.
  • Enforcement proceedings under the Tax and Social Security Procedures Code will not be initiated except in special cases to which this prohibition does not apply (no prohibition is provided for the imposition of preliminary security measures in the course of tax control proceedings and for securing evidence in fiscal control).
  • The enforcement on debtors’ assets for public claims is suspended, but security measures may be imposed and the amounts received in the enforcement procedure may be distributed. Upon the request of the debtor, the enforcement measures may be initiated against its valuables in vaults, on its receivables and funds in banks.

The limitation periods for the establishment of administrative offenses and for the payment of fines and sanctions are not extended and do not cease to run for the period of the state of emergency.

Preparation, signing and publication of the Annual Financial Statements for 2019 in accordance with the Accounting Act:
  • The deadline for publication of the annual financial statements for 2019 is extended to 30 September 2020 and the deadline for filing of declaration for lack of activity is extended to 30 June 2020.
  • The Act provides for the possibility to sign the annual financial statements for 2019 by means of an electronic signature under Article 13 of the Electronic Document and Electronic Certification Services Act on behalf of the legal representative of the enterprise, the preparer of the financial statements and the registered auditors who have performed an independent financial audit of the financial statements.
How can we help?

The team of KPMG remains at your disposal for any inquiries or need of assistance you may have related to the interpretation and application of the Act and the changes introduced therewith.