Gov’t modifies Tax Code application rules

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The interest rate on forex loans to be considered for the computation of taxable profits will be set at 8 percent as from fiscal year 2009, according to a decision adopted by Government at its meeting on May 20.
The government passed a normative act amending point 701 in the application rules for Law 571/2003 concerning the Tax Code.
The new normative act is said to have been necessary for the updating of fiscal data in accordance with Article 23(5)(b) of Law 571/2003 concerning the Tax Code, according to which interest on forex loans taken from other entities than Romanian or foreign credit institutions, non-banking financial institution or similar organisations, as well as on forex loans raised from group member companies, shareholders, or business partners shall be updated under the decision of the Government.
For the computation of taxable profits starting with 2007, the interest on forex loans was 7 percent.
In the context of the latest economic developments and in order to support the business environment, deductibility of interest rates on forex loans will be expanded to include such loans raised from group member companies, shareholders, or business partners, currently limited at 7 percent. Interest rates on forex loans taken from other entities than Romanian or foreign credit institutions, non-banking financial institution or similar organizations are fully deductible.
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