Fiscal regime from the profit tax point of view Student:iirig Alina-MariaGroup: 649

Content of project

Definition Non-taxable incomes Types of activities Rules and steps for NGOs tax computationAccounting issues regarding NGOs

Definition

Non-governmental organizations (NGOs) are: legal persons (legal status) that are created by individuals or legal entities pursuing certain activities for the public interest or in the interest of local authorities or, where applicable, their private prerogatives.

Non taxable incomes

a) contributions and tuition fees of members;b) contributions in cash or in kind by members and supporters;c) registration fees established by legislation;d) income from visas, taxes and penalties sport or participation in sports competitions and demonstrations;e) donations and sponsorship money or goods received;f) Dividend and interest earned on cash resulting from exempt income;g) income for which tax is due on shows;h) the resources obtained from public funds or grants;i) income from occasional activities such as fundraising events with participation fee, festivals, raffles, conferences, used in social or professional purposes, according to their status;j) exceptional income arising from disposal of tangible assets owned by nonprofit organizations other than those that are or have been used in economic activity;k) income from advertising and publicity, made public benefit nonprofit organizations, according to the laws of organization and functioning of culture, scientific research, education, sports, health, and the chambers of commerce and industry, trade unions and organizations employers.l) amounts received as a result of failure to comply with that initiated the donation / sponsorship, law, provided that those amounts be used by nonprofit organizations in the current year or in future years to achieve their goals and objectives, according to the act incorporation or statutes, if applicable;m) income from compensation from insurance companies for damage to own tangible assets other than those that are used in economic activity;n) amounts received from the income tax owed by individuals, according to Title III.

Rules and steps for NGOs tax computation

Identify nontaxable income;Identify the non taxable part from economic activities income;Compute the total nontaxable income as sum of the incomes mentioned above;Determin the taxable income as a diffrence between total income and total nontaxable income; Compute the taxable profit considering the following:Establish the expenses incurred in order to achieve taxable income. Determin the amount of deductible expenses. Determin taxable profit as difference between taxable income and deductible expenses related to taxable income.Compute the profit tax by applying 16% to taxable profit.

Accounting issues

Double entry bookkeeping, using a specific account plan; In the case of NGOs which undertakes both non-profit and economic activities will be used in establishing the analytical accounts of the 2 types of activities.;NGOs will prepare quarterly balance;NGOs may be liable for VAT, VAT deduction will be made on a pro-rata;NGO can have employees with individual employment contract or civil agreement based collaboration;NGOs will submit the following statements:Statement 100 quarterly ( income tax relating to economic activity);Statement 100 quarterly (declaration of salary tax for NGOs which in the previous had maximum 3 employees);Statement 100 - monthly for payroll tax declaration for NGOs if in the previous year had more than 3 employees;D101 - annually by 25th of March of the following year;D112 - monthly or quarterly, for declaration of social contributions;VAT returns for NGOs if are registered in VAT purposes (D300, D390, D394, D392A) or D392B-if NGOs is not registered in VAT purposes;Annual Financial Statements - until April 30 next year.

Practical example A nonprofit organization registered in the course of a financial year:a. non-taxable income (membership fees and donations): 700,000 lei;b. income from economic activities 70,000 lei;c. Total expenses recorded during the financial exercised is 65,000 lei, of which 45,000 lei for economic activities.Compute the profit tax.Revenues from economic activities =70.000Min (15.000 eur * 4,2 ron/eur, 10% * 700.000)=min(63.000, 70.000)= 63.000 ronTaxable income from economic activities = 70.000 63.000 = 7.000 ronThe percentage of taxable income in total (ec. activities) = 7.000/70.000=10%The amount of expenses from ec. activities related to taxable income= 10% * 45.000 ron= 4.500 ron Taxable profit = 7.000 4.500 = 2.500 ronProfit tax = 16% * 2.500= 400 ron

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