Emergency Government Ordinance no. 29/2020 regarding certain tax and economic incentives - published in the Official Gazette no. 230 / 21st of March 2020

Given the expected COVID-19 pandemic's impact on the economy and, moreover on the small and medium sized entities, the authorities have decided to immediately implement certain measures to mitigate its impact. We hereinafter present a summary of the measures implemented in the tax, economic and administrative (ultimate beneficial owner) area.

I. Prolongation of certain payment deadlines, as follows:

• The payment deadline related to tax on buildings, land and vehicles is extended from 31st of March 2020 to 30th of June 2020
• Also, the bonification for advanced fully payment is still available if the full payment is performed until 30th of June 2020.

II. Changes to restructuring of tax liabilities:

• Taxpayers may still notify the tax authorities regarding their intention to have the tax liabilities restructured during 1st of February - 31st of July 2020 (the initial deadline was 31st of October);
• The written restructuring request, along with the restructuring plan and the private prudent creditor test may be submitted up to 30th of October 2020.

III. Late payment interest and penalties during the emergency state as well as 30 days after the state elapsed:

• No late payment interest and penalties are computed for tax liabilities due starting with 21st of March 2020 and unpaid until the end of the emergency state and 30 days after, as well;
• Throughout this period, these tax liabilities are not considered outstanding.

IV. Suspension of forced execution:

• " No forced execution measures are implemented, save for those relating to court decisions in the area of criminal law, during the emergency state and 30 days after.

V. Possibility to revert back to the standard corporate income tax regime:

• " During 2020, taxpayers applying the annual corporate income tax regime with advanced quarterly payments may perform anticipated payments up to the level of the current quarterly corporate income tax. The system shall be maintained for all remaining quarters of 2020.
• " Taxpayers with a modified fiscal year will apply this change for the remaining quarters of the year closing in 2020, as well as for the quarters of the new fiscal year starting in 2020 until the end of 2020.

Economic incentives:

I. Payment deferral and force majeure during the state of emergency:

• The following entities may be eligible for deferring the payment related to utilities (e.g. electricity, water, telephony, internet) and rental of the headquarters and secondary offices:
  • Small and medium sized entities which (i) have partially or totally interrupted their activities upon the decisions of the competent public authorities during the state of emergency and (ii) are holding the emergency situation certificated issued by the Ministry of Economy, Energy and Business Environment;
  • Public notaries, lawyers, court executors that have been directly affected by the measures implemented by the public authorities further to the COVID-19 crisis. Nevertheless, the eligibility criteria are to be set forth by way of a Government Decision.
  • General practitioners and dentists carrying out their activity with less than 20 persons and whose activity has been directly affected by the measures implemented by the public authorities in this context. Eligibility criteria are to be set forth by way of a Government Decision.
  • national sports federations and sports clubs holding a sports identity certificate and whose activities were directly affected by the measures. eligibility criteria are to be set forth by way of a Government Decision.
• The force majeure clause within ongoing agreements concluded by small and medium sized entities may be invoked as long as the clauses of the agreements were sought to be renegotiated in order to be adjusted to the current state of emergency. The law requires that companies shall hold written proofs (including electronic proofs) to justify the intention to renegotiate the clauses.
• Late payment penalties which regularly arise within the contracts concluded with public authorities shall not be assessed during the state of emergency.

II. Government Emergency Ordinance no. 110/2017 regarding the Support program for small and medium-sized enterprises (SME) - IMM INVEST ROMANIA is amended and completed as follows:

• State guarantees of one/several loans for investments and/or for working capital, up to maximum 80% of the value of the financing, except interests, commissions and bank fees related to the guaranteed bank loan:
  • Maximum value of loans/credit lines for financing the working capital of a beneficiary cannot exceed the arithmetic mean of related expenses from the past two fiscal years, capped at RON 5,000,000.
  • For investment loans, the maximum value of the financing is RON 10,000,000.
  • The maximum cumulated value of financing guaranteed by the state that can be granted to a beneficiary based on this incentive is RON 10,000,000.
  • For SMEs that have not submitted financial statements at the date when the guaranteed loan is requested, the maximum value of the financing for loans/credit lines for working capital will be computed based on the arithmetic mean of expenses related to the working capital from the monthly trial balances.

OR

• In case of microenterprises or small enterprises, the guarantees for loans / credit lines for financing working capital, except interest, commissions and bank fees related to the state guaranteed loan can reach a maximum 90%, capped at RON 500,000 for microenterprises, namely, RON 1,000,000 for small enterprises.
  • The maximum value of each loan granted to a beneficiary cannot exceed the arithmetic mean of expenses related to working capital from the past two fiscal years, under the limits mentioned above.
  • In case of microenterprises or small enterprises that have not submitted financial statements at the date when the guaranteed loan is requested, the maximum value of the financing for loans/credit lines for working capital will be the double of the arithmetic mean of the expenses related to working capital from the monthly trial balances.
• The interest will be 100% subsidized by the Ministry of Public Finances within a state aid / minimis scheme.
• The period for which the interest is subsidized spans from the moment the loan was granted up to 31st of March 2021 at the latest. The subsidizing of the interest will be approved on an annual basis, through a normative act having the power of a law. This will be valid for the first year and for the following 2 years only if the economic growth estimated by the National Commission of Strategy and Prognosis for this period is under the level of the one registered for 2020. Interest subsidizing is done under the conditions of the applicable state aid legislation.
• The maximum duration of the financing is of 120 months in case of loans for investments and of 36 months in case of loans/credit lines for working capital. Loans/credit lines for working capital can be extended with maximum 36 months and in the last year of the extension period they should be reimbursed under the conditions established by the methodological norms for the application of the present emergency ordinance.
• Also, the beneficiary of the program should not have at 31st of December 2019 outstanding fiscal debts and other budgetary debts administered by the central fiscal body. If such outstanding loans exist, the beneficiary obliges to pay them out of the loan/credit line for working capital granted within the program.

Other measures on submitting certain statements:

I. The deadline for submission of the ultimate beneficial owner (UBO) statement is extended with 3 months after the end of the emergency state period. During the emergency state period, the submission of the statement is suspended for both companies as well as NGOs.