Exam Flashcards
In Romania we have a tax system based on __________ tax rate
Flat
In Romania the personal income tax is
10%
In Romania we have the following tax rate for companies
16% 3% 1%
In Romania the corporate income tax is
16%
In Romania the revenue tax is
1% and 3%
According to the _________________ principle the budget is drafted and voted yearly
Annuality
The maximum value of one meal ticket that can be given by an employer with it being taxed with social contributions is _______ lei/day
15,25 lei
Orthopedic products are taxed with
9%
VAT rate in Romania is
19% 9% 5% 0%
The following products and services are exempt from VAT:
Medical services Education Public institutions Banking system Churches Public postal services Supply of organs, blood and milk of human beings
19% is
the general VAT rate in Romania
Accommodation in hotels and bed&breakfast are taxed with
9%
9% and 5% are
The reduced VAT rates in Romania
Human and veterinarian drugs are taxed
9%
Draft beer is taxed with
9%
Cultural activities (tickets to museums, concerts etc.) are taxed with
5%
The hospitality industry is taxed with
9%
Property bought/sold to be used in social policy related issues (hospitals, elderly homes) are taxed with
5%
Apartments smaller than 120 m2 and houses including the garden smaller than 250 m2 & with a price smaller than 450.000 lei & if the buyers didn’t previously benefit from a reduced rate are taxed with
5%
Medical services are taxed with
0% (they are exempt from tax)
Education is taxed with
0% (exempt from tax)
Public institutions are taxed with
0% (exempt from tax)
Books and newspapers that aren’t solely destined to advertising are taxed with
5%
Food and non-alcoholic beverages are taxed with
9%
The banking system is taxed with
0% (exempt from tax)
Churches are taxed with
0% (exempt from tax)
Public postal services are taxed with
0% (exempt from tax)
Supply of organs, blood and milk of human beings is taxed with
0% (exempt from tax)
The maximum amount that can be recovered in the current year from sponsorships is
min(0,5% x turnover; 20% x Gross Income)
According to the ___________ principle all revenues and expenses should be entered into one single document
Unity
According to the __________________ all the revenues and all the expenses have to be included in the budget with their total amount and split into two categories: revenue and expenses
Universality
According to the _____________ principle the amounts put in the budget should reflect the economic situation in the country
Budget reality
According to the _________ principle the revenue should equal the expenses
Equilibrium
According to the ____________ principle the revenue should not be linked with expenses
Non assignment
According to the _______________ principle revenues have to be classified according to the source and expenses have to be classified by a strict classification
Specialization
According to the principle of _______________ the budget had to be made available in all the stages of the drafting and also after its approval
Transparency/Publicity
According to the ________________ principle the budget has to include revenues or expenses in the local currency
Units of account
The budgeting process in Romania has ______ steps
8
The 9% VAT reduced rate applies to:
Food and non-alcoholic beverages Human and veterinarian drugs Accommodation in hotels and bed&breakfasts Orthopedic products Draft beer
The 5% reduced VAT rate applies to:
Cultural activities e.g. tickets to museums, concerts etc.
Books and magazines not destined for advertising
Property bought/sold to be used in social policy related issues: hospitals, elderly homes
Houses and apartments in certain conditions
To be taxed with a 5% VAT rate property has to meet the following criteria:
For apartments: smaller than 120 m2 and total price under 450.000 lei
For houses: smaller than 250 m2 and total price under 450.000 lei
& the buyers did not previously benefit from a 5% reduced VAT rate
Or
Is bought/sold to be used in social policy related issues
The sale of an apartment will be taxed with 5% if
Is smaller than 120 m2 and has a total price under 450.000 lei
The sale of a house will be taxed with 5% if
It’s smaller than 250 m2 including the garden and has a total price under 450.000 lei
Net salary is equal to
NS= GS - SSC - PIT - SP
Net Salary = Gross Salary - Social Security Contributions - Personal Income Tax - Special Payments
ND = 0,585 x GS + 10% x PD (-10% MT) - SP
Personal Income Tax PIT is equal to
10% x Taxable Salary
Taxable salary is equal to
GS - SSC - PD/SP + MT
Gross Salary - Social Security Contributions - Personal Deductions/Special Payments + Meal Tickets
Child allowance can be in the maximum amount of
390 (130x3)
Special payments consist of
Private Healthcare, Private Pension, Workers Union Contribution
Private Pension and Private Healthcare can be deducted up to
150 lei / month each
Personal deductions consist of
Child allowance of 130 lei per child for up to 3 children => 390
and
Fixed amounts up to 3100 lei starting from the minimum salary of 1900 (510)
Social Security Contributions SSC are equal to
35% x Gross Salary
Total Salary Expenditure is equal to
2,25% x Gross Salary + Gross Salary + Meal Tickets
The elements of tax are
Subject, supporter, object, measurement unit, payment date, tax rate
Tax rate can be
Flat, progressive and regressive
A progressive tax rate
Increases as the object of the tax increases
A regressive tax rate
Decreases as the object of the tax (income) increases e.g. when there is a cap on the maximum amount paid for healthcare contributions
A tax is
A mandatory contribution to the state for which you should not expect any counter performance in return
Taxes differ from
Contributions for which you receive a counter performance
Tax on interest from bank deposits and half of tax from dividends from investments
Is a withholding tax
The formula for compound interest is
Sn=S0x(1+r)^n
The formula for simple interest is
Sn=S0 x (1+n x r)
Tax on dividends is equal to
5%
Tax on rental income is
10%
Rental Income is equal to
Total revenue - tax
Tax = 10% x taxable revenue
Taxable revenue = total revenue - 40% deductible expenses
It is non-taxable revenue
Revenue which has already been taxed (dividends, interest)
Revenue received from the state
Adjustment values
It is a nondeductible expense
Fines and sponshorships
Partly deductible expenses are
Expenses with food 2% of Gross Income
50% of expenses with fuel for vehicles
5% of the Gross Salary for social expenses
A company will pay a CIT
If they have shareholders equity of at least 45.000 lei and at least 2 employees (not compulsory)
And
If it has a turnover that exceeds 1 mil € (compulsory)
Principles of VAT
- VAT is not a cost for the taxable person
- VAT always appears at the place of operation because it is a national tax
- VAT is a cost only for the final consumer
Collected VAT
Is VAT collected from a sale
Deductible VAT is
VAT that a company pay for a purchase
When Collected VAT is > than deductible VAT we have
Payable VAT
When collected VAT is < than deductible VAT we have
Receivable VAT
In which cases can we have receivable VAT?
If the company sells books or if it exports goods
Companies can choose not to register for VAT if
They have a turnover of less than 65.000 € (300.000 lei)
Questions that should be answered when deciding if you want to register for VAT
- Who is my customer?
2. Do most of my expenses include VAT?
How can you know if a company is registered for VAT?
The tax identification CUI/CIF will include letters as well not only digits e.d. RO88888888
If you exceed a turnover of _______________ you will have to register for VAT ______________
65.000€/ 300.000 lei, next month
In Romania the budget initiative is assigned to _____________
The Government
Who is responsible for drafting the budget
The Ministry of Public Finance
The budget is executed by
The Ministry of Public Finance
When we make budgeting investments decisions we use ____________
The Cost-Benefit Matrix, the Top Matrix and the Financing Matrix
An investment can generate impact as far as _______________ and ________________ are concerned
Quality of life, generating revenue
When we decide which investment we should finance we should look at
How much money we spend for one impact point
The following phases of the budgetary process in Romania are not public
- Budget initiative
- Drafting of the budget
- Agreement of the Government
The Budget will go into force
On January 1st/ when it is published in the official gazette
Definition of the budget
A forecasting document which includes for a defined period the revenues and expenses
The consolidated budget includes
The state budget The local budgets Social security budget Budget for independent public authorities Special budgets
