Taxation Project

The legal definition and the economic definition of taxes differ in that economists do not consider many transfers to governments to be taxes. For example, some transfers to the public sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments. To tax (from the Latin taxo) is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.

Tax[1] is a form of removal of part of income and / or assets of individuals and businesses to the state to cover public expenditure. This sampling is not necessarily on a non-refundable and non counterpaid directly from the state. Governments also obtain resources by creating money (e. g. , printing bills and minting coins), through voluntary gifts (e. g. , contributions to public universities and museums),by imposing penalties (e. g. , traffic fines), by borrowing, and by confiscating wealth.

From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the public sector levied on a basis of predetermined criteria and without reference to specific benefit received. Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population.

Historically, the nobility were supported by taxes on the poor; modern social security systems are intended to support the poor, the disabled, or the retired by taxes on those who are still working. In addition, taxes are applied to fund foreign aid and military ventures, to influence the macroeconomic performance of the economy (the government’s strategy for doing this is called its fiscal policy; see also tax exemption), or to modify patterns of consumption or employment within an economy, by making some classes of transaction more or less attractive.

A nation’s tax system is often a reflection of its communal values or/and the values of those in power. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community that the public and/or government wishes to create.

In countries where the public does not have a significant amount of influence over the system of taxation, that system May be more of a reflection on the values of those in power. 1. 2. Direct taxes Direct taxes constitute the basis of the taxation system. Historically, having appeared later than the direct taxes, indirect taxation mechanisms are transformed into a more palpable channel for the provision of state budget revenues, i. e. for covering the expenses of the state.

In the general sense, a direct tax[2] is one paid directly to the government by the persons (juridical or natural) on whom it is imposed (often accompanied by a tax return filed by the taxpayer). Examples include some income taxes, some corporate taxes, and transfer taxes such as estate (inheritance) tax and gift tax. Romanian companies and individuals pay tax on their Romanian and worldwide income. Non-residents companies and individuals pay tax only on Romanian source income.

A foreign company is resident if the management is in Romania. An individual is resident if the center of living is in Romania, or if staying in Romania for 183 days within 12 months. In comparison corporation tax in the Germany is levied on the profits made by companies and on the profits of permanent establishments of non-UK resident companies and associations that trade in the EU. Prior to the tax’s enactment on 1 May 1965, companies and individuals paid the same income tax, with an additional profits tax levied on companies.

The Finance Act 1965 replaced this structure for companies and associations with a single corporate tax, which borrowed its basic structure and rules from the income tax system. Since 1997, the UK’s Tax Law Rewrite Project has been modernizing the UK’s tax legislation, starting with income tax, while the legislation imposing corporation tax has itself been amended; the rules governing income tax and corporation tax have thus diverged.

Corporation tax is governed by the Income and Corporation Taxes Act 1988 (as amended). We appreciate that direct taxes shall have the following advantages: -a secure income for the state, known in advance, which May be based on certain time intervals; -meet goal of tax justice, because they are exempt minimum income necessary to subsist and that take account of family tasks, are easily calculated and perceived. Direct taxes have the following disadvantages:

-there are delightful payers, it is considered that it would not be productive, whereas the lead member would not have interest to become unpopular by the size of these taxes, -could lead to abuses in the settlement and collection of taxes. 1. 2. 1. Profit Taxes Income tax is calculated by the taxpayer through applying the quotas established legally on taxable profits determined on the basis of the quotas listed monthly in the General Ledger. Calculation shall be made monthly, cumulative from the beginning of the calendar year. The share of taxation is a proportional percentage share of 16% of the profit.

Profit tax is paid on the state budget or local budgets, as appropriate by: Romanian legal persons, for the taxable profit obtained from any source, both from Romania and abroad; Foreign legal persons carrying out activities through a permanent establishment in Romania, for the taxable profit related to that permanent establishment; Legal and foreign individuals operating in Romania as a partner in a combination that does not give rise to a legal person, all income derived from work carried out in Romania; Legal and physical Romanian revenue from a combination of them which does not give rise to a legal person.

In this case, the tax payable by individuals is calculated shall be retained and paid by the legal person. A tax is imposed on net taxable income in the United States by the Federal, most state, and some local governments. Income tax is imposed on individuals, corporations, estates, and trusts. The definition of net taxable income for most sub-federal jurisdictions mostly follows the Federal definition. The taxable income is defined in a comprehensive manner in the Internal Revenue Code and regulations[3] issued by the Department of Treasury and the Internal Revenue Service.

Taxable income is gross income as adjusted less tax deductions. Most states and localities follow this definition at least in part, though some make adjustments to determine income taxed in that jurisdiction. Taxable income for a company or business May not be the same as its book income. The standard profits tax rate is 16%. Profits tax payable by companies earning revenues from bars, nightclubs, discos, casinos and sports bets (including revenues from an association agreement) is computed at the standard 16% rate, provided the tax amount is not less than 5% of the total declared revenue.

In case the profits tax payable is below this threshold, the taxpayer is liable to pay profits tax computed at 5% of the declared revenue from such activities. If certain conditions are met, companies May opt for the micro enterprise regime, under which a 2. 5% (3% in 2009) income tax rate is applied to revenues derived by the company. The conditions to qualify for the micro enterprise regime are the following: • annual turnover up to EUR 100,000; • company should have between 1 and 9 employees; and • company should derive more than 50% of its income from activities other than consultancy and management.

Representative offices are taxed on a yearly basis at a lump sum of the RON equivalent of EUR 4,000, payable in two equal instalments. 1. 2. 2. Salary (payroll) taxes Employer payroll taxes are paid from the employer’s own funds, either as a fixed charge per employee or as a percentage of each employee’s pay. Payroll taxes often cover government social insurance programs, such as social security, health care, unemployment, and disability. These payments do not count toward the income taxes of employees and employers, but are normally deductible by the employer as a business expense.

For example, in the United States, payroll taxes are assessed by the federal government, all fifty states, the District of Columbia, and numerous cities. These taxes are imposed on employers and employees and on various compensation bases and are collected and paid to the taxing jurisdiction by the employers. Most jurisdictions imposing payroll taxes require reporting quarterly and annually in most cases, and electronic reporting is generally required for all but small employers. Federal, state, and local withholding taxes are required in those jurisdictions imposing an income tax.

Employers having contact with the jurisdiction must withhold the tax from wages paid to their employees in those jurisdictions. Computation of the amount of tax to withhold is performed by the employer based on representations by the employee regarding his/her tax status on IRS Form. Amounts of income tax so withheld must be paid to the taxing jurisdiction, and are available as refundable tax credits to the employees. Income taxes withheld from payroll are not final taxes, merely prepayments. Employees must still file income tax returns and self assess tax, claiming amounts withheld as payments.

The contributions by the employer and the employee to the social security are subject to to ceiling defined by law. Starting point for determining taxable income: Taxable income equals revenues from all sources, including the delivery of goods and the supply of services, less deductible expenses, non-taxable revenues and other deductions and adding the non-deductible expenses and other elements. 1. 2. 3. Dividend taxes Measures imposed by the Romanian National Bank the Romanian National Bank can take safeguarding measures related to the monetary capital operations, measures which will apply to both residents or nonresidents.

As examples, these measures taken by the National Bank can be the following: Obligation of residents and non-residents to notify the Romanian National Bank with at least 10 days before the intention to conclude monetary capital operations on a short-time basis, establishing limitations for monetary capital operations on a short-term basis which generate incoming/outgoing of capital from residents/non-residents, applying a commission for the initiation of transactions regarding the monetary market etc. ). A dividend tax is an income tax on dividend payments to the stockholders (shareholders) of a company.

In most jurisdictions worldwide, dividend payments are considered ordinary income and are taxed as such, the same as if the taxpayer had earned the income working at a job. Other jurisdictions separate dividend income and characterize it as something other than ordinary income subject to different tax rates if taxed at all. Depending on the jurisdiction dividend income along with interest income, collected rents, or other “unearned income” May also be taxed and is the subject of recurring debate as to whether or not these taxes should be eliminated.

If the condition of shareholding period is fulfilled at a later stage, the dividend beneficiary would be entitled to exemption at that moment and May request reimbursement of the withholding tax paid. Dividends paid by a Romanian entity to individual shareholders are subject to 16% withholding tax rate. Payments made by a Romanian legal entity to any of its shareholders for goods or services provided by the latter, in excess of the market value of the transaction, are assimilated to dividends from a tax point of view.

The same tax treatment will apply to payments made for supply of goods/services to be used for personal purposes by the company’s shareholders or associates. The dividend tax must be withheld and paid to the state budget by the 25th of the month following the payment of dividend. In case of dividends declared, which were not effectively paid by the end of the year, the dividend tax must be paid by 31 December of the respective year. 1. 2. 4. Local taxes.

Local taxes and fees[4] are a form of sampling parts from the income and/or wealth individuals and businesses available to local communities in order to cover public expenditure. This sampling is made compulsory, as a non-refundable and rare counterpaid directly from the administrative-territorial unit. Local taxes are revenue budgets owned by administrative-territorial units and are used to finance such expenditure budgets. Tax on buildings: This tax is paid annually by individuals and legal entities, owners of buildings, regardless of where they are located and what its destination is given.

Failure to pay tax on time is punished with the first increase of 0. 3% for each day of delay which apply over the delay in payment. Tax on land: This tax is paid by individuals, legal persons, family associations, agricultural associations, economic units of legal persons, and those of political and public organizations, public institutions, foundations, religious establishments, subsidiaries, branches authorized to operate in the territory Romania, belonging to individuals and foreign legal entities that hold ownership of land area located in towns, cities and communes.

Tax on vehicles: This fee is paid by individuals and legal persons of Romania and foreign companies who have vehicles with traction and mechanical means of transportation on water. Tax on vehicles is due since the first month in which they were acquired, and if the transfer or deletion of records of the police or the captains of ports, where appropriate, the fee is given to decrease since First of the month in which to come up one of these situations. Cars, motorcycles with sidecar and motor tricycles which are disabled and are adapted to their disability are exempt from tax. 1. 3. Indirect taxes.

The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax [such as sales tax, value added tax (VAT), or goods and services tax (GST)] is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.

Some commentators have argued that “a direct tax is one that cannot be shifted by the taxpayer to someone else, whereas an indirect tax can be. ” An indirect tax May increase the price of a good so that consumers are actually paying the tax by paying more for the products. Examples would be fuel, liquor, and cigarette taxes. An excise duty on motor cars is paid in the first instance by the manufacturer of the cars; ultimately the manufacturer transfers the burden of this duty to the buyer of the car in form of a higher price.

Thus, an indirect tax is such which can be shifted or passed on. The formation of the budget revenues entails the collection not only of direct, but also of indirect taxes. In developed countries the relative weight of indirect taxes is usually lower than that of direct ones, while in developing countries—the opposite occurs. Indirect taxes are applied to goods and services and take the form of an addition to its price or tariff. The payers of indirect taxes are the buyers or the consumers.

All the citizens, independently of their income pay indirect taxes because they consume goods and services necessary for survival and which are chargeable to indirect taxation. Indirect taxes are the simplest to collect and are also difficult to evade by the taxpayer. These taxes are also attractive to the government for the reason that their receipt does not depend directly on the financial-economic activity of the taxation subject, and the fiscal effect is achieved even in conditions of production downfalls and unprofitable periods of enterprises. 1. 3. 1.

Value Added Tax Value added tax applies only on the difference between the selling price and the purchase price, only on what is called value added by each public participate in the production and movement of goods. Value added tax is a tax on net turnover[5], a tax collected multistage on sales during the production, in trade and on imports. The “value added” to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed.

It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products. Value added tax can be calculated by applying the proportionate share in the following way: The value added in each stage you browse merchandise from producer to consumer; The selling price of the state concerned in achieving this kind of tax on the sale price of the previous stage.

The genuine VAT fee is not to be made to the customs authorities by a person registered as a VAT payer that has obtained an exoneration permit for the subsequent cases: 1. import of technological equipment, installations, industrial machines, equipments, measurement and control devices, automations, meant to perform investments, in addition to the import of agricultural machines and transportation means intended to perform productive conduct; and 2. import of raw materials and consumable materials that are not created or are in short supply in the usage country for economic activity of the person performing the import.

Value added tax has the following characteristics: it is a general indirect tax, a tax neutral towards prices, unique, but with payment split. Value added tax is characterized by transparency, meaning that allows each citizen or employer to know exactly what the size of the tax is. This tax is characterized by uniqueness, i. e. regardless of the circuit that it produces the raw material to finished product, respectively, on how to go public until it obtains a certain commodity, and the fee is the same size, which means that only depends on size of the circuit that avoids overlapping taxation.

Another characteristic feature of value added tax is that its application is only in the country where the product is consumed. Also value added tax has the following advantages: creating equal conditions of competition, prices spheres together with the production of consumption creates conditions for the participation of national economies to processes of economic integration through the common mechanism of taxation. unrecovered input VAT would generally represent a cost. Refund of VAT.

If the input VAT exceeds the output VAT, the recoverable balance VAT (defined as ‘negative VAT balance’) can be: • carried forward to the next period; or • refunded by the tax authorities, based on the option expressed by the taxpayer in the VAT return. The option can be exercised only for a negative VAT balance exceeding RON 5,000. A taxable person established in the Community that is not registered or liable to register for VAT purposes in Romania May request a refund of VAT paid.

A taxable person not established in the Community that is not registered or liable to register for VAT purposes in Romania May request the refund of the VAT paid if, under the laws of its country of establishment, a taxable person established in Romania has the same right in that country. 1. 3. 2. Duty Excise duty is a form of consumption taxes (an indirect tax) very widespread in the economic market in the selling price of the goods, or products and completed (sold) in the country, appreciated that there are strict necessity in the population.

Public purchasing of individual producers for marketing those products, are required to calculate the flow and the state budget for duty. The duty is due to: the date of customs clearance for importers, date of purchase of goods for public purchasers, the date of the sale of goods for goods entering the country by individuals not registered as public, but marketed by the latter. Import duties are the most common and are designed to replenish the state budget revenues, to limit to a certain extent, imports of goods and thus to decrease the possibility that indigenous goods to be completed by aliens.

Sometimes these fees are a real pike that does not allow foreign goods entering the country. Some other Member States grant special advantages with regard to foreign trade, up to and import duties preferential lower for goods imported from those countries. The Inward Processing procedure provides non-Community goods intended for re-export from the territory of the Community in the form of compensating products, without application of import duties or commercial policy measures.

This specific procedure is also applicable to goods released for free circulation with repayment or remission of import duties chargeable on such goods if they are exported from the territory of the Community as compensatory products. Processing under customs control procedure allows non- Community goods to be used in the territory of the Community in operations which alter their nature or state, without application of import duties or commercial policy measures, and shall allow the products resulting from such operations to be released for free circulation at the rate of import duty appropriate to them.

The temporary admission procedure allows the use in the customs territory of the Community, with total or partial relief from import duties and without them being subject to commercial policy measures, of non-Community goods intended for re-export without having undergone any change except normal depreciation due to their use. The outward processing allows Community goods to be exported temporarily from the customs territory of the Community in order to undergo processing operations and the products resulting from those operations to be released for free circulation with total or partial relief from import duties.

The export allows Community goods to leave the customs territory and entails the application of exit formalities including commercial policy measures. Free warehouses and free trade zones are specifically regulated by the Community customs regulations, where Community goods are considered as not being on Community customs territory for the purpose of import duties and commercial policy import measures, and also where Community goods subject to export measures May be placed. 1. 3. 3. Excise

An excise or excise tax (sometimes called a duty of excise special tax) is commonly understood to refer to an inland tax on the sale, or production for sale, of specific goods; or, more narrowly, as a tax on a good produced for sale, or sold, within a country. An excise tax[6] is one levied on specific goods or commodities produced or sold within a country, or on licenses granted for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes.

An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover the tax by raising the price paid by the buyer (that is, to shift or pass on the tax). Excises are typically imposed in addition to another indirect tax such as a sales tax or VAT. A special form of hypothecation arises where an excise is used to compensate a party to a transaction for alleged uncontrollable abuse; for example, a blank media tax is a tax on recordable media such as CD-Rs, whose proceeds are typically allocated to copyright holders.

Critics charge that such taxes blindly tax those who make legitimate and illegitimate usages of the products; for instance, a person or corporation using CD-R’s for data archival should not have to subsidize the producers of popular music. Excises (or exemptions from them) are also used to modify consumption patterns (social engineering). For example, a high excise is used to discourage alcohol consumption, relative to other goods. This May be combined with hypothecation if the proceeds are then used to pay for the costs of treating illness caused by alcohol abuse.

Similar taxes May exist on tobacco, pornography, etc. , and they May be collectively referred to as “sin taxes”. A carbon tax is a tax on the consumption of carbon-based non-renewable fuels, such as petrol, diesel-fuel, jet fuels, and natural gas. The object is to reduce the release of carbon into the atmosphere. In Romania, vehicle excise duty is an annual tax on vehicle ownership. Chapter 2 – S. C. Sarten S. R. L. Company presentation 2. 1. Short history SC Sarten SRL is specialized in production of boxes for cans, plastic containers and lids.

The company operates nine other factories in Turkey and one in Bulgaria, in Pleven. The company also has set up a factory in Krasnodar in South Russia, on the shores of the Black Sea. In March 2005 pursuant to law 31/1990 came into existence S. C. Sarten Packaging SRL, being one of the largest producers of cartons for canned food in the country, with a specialization experience in this area for over 4 years. S. C. Sarten Packaging LTD has its head office is in Galati, 1 Decembrie 1918 Street, no. 134, having a share capital of 7.

892. 900 lei, divided into 315. 716 shares with face value of 25 lei/action. The basic aim of company is the production and marketing of: ? Cartons for canned: round Cans diameter from 50 mm to 230 mm and capacity to 70 gr. up to 10 Kg; ? Boxes with profile: diameter 73 mm to 99 mm and capacity from 125 ml up to 975 ml; ? Boxes for food oils: round and rectangular cans from 170 ml up to 20 litres; ? Boxes for motor oils: round and rectangular cans from 170 ml up to 17 litres and buckets of 25 litres; ?

Boxes for agricultural chemicals: the round and rectangular cans from 200 ml to 20 litres; ? Boxes for paints and varnishes: round and rectangular boxes from 50 ml to 20 litres; ? Deep drawn Cans; ? Aerosols: aerosol packaging and oblique from 45 mm to 65 mm in diameter and the capacity to 90 ml to 1 000 ml; ? Plastic Containers for oils: bottles with capacity of 50 ml up to 30,000 ml; ? Plastic Bottles for sauces and others: with 3, 4, 5 and 6 layers for agricultural chemicals and sauces with capacity from 100 ml to 1 000 ml; ? Casolets of plastics; ?

Tins for cheese; ? Twist-off Caps: good for pasteurization and sterlizare with a diameter of 38 mm to 100 mm; ? Caps with open light: diameter of 52 mm to 99 mm, which is manufactured after the “electro-coating technology”. Stock management is ensured by a General-Director, that runsother three Directors: coordinate technical director, production director and managing director, leading and engaged in relations with suppliers, customers, banks, State budget and other special funds and budgets, in matters of taxation obligations relating to the payment of taxes, fees and contributions to various funds.

2. 2. Organizational Structure SC Sarten Packaging SRL has an organizational structure of a pyramidal type, and the management of the company shall be carried out by the Director-general. General Organisation chart– is the most complex, it includes all the functions of a society whose content arising under the statutes of incorporation is complex, with the figure of the deal in particular with the productive domain revenue producer.

This type of organization chart creates the possibility to use a very precise ranking, where each subject has a single head. In a situation where it becomes high or very high, the speed of reaction of structure drops drastically what May cause delays in the flow of illegal information and, as such, extremely low flexibility which can produce a very slow adaptation to the rapid changes in the external environment. This stiffness can bring benefits only if a stable or a product lifecycle long or very long.

Because the organization chart is a graphical hierarchical levels corresponding to the number of functional sections associated with each hierarchical level, with the number of functions for each bucket, and the number of employees under the authority of each Office the whole organizational structure will be reflected in the functions of the company. The general meeting of Members shall meet once a year in ordinary session, to approve the annual financial statements and proposals for the distribution of profits. The annual meeting shall discuss and sizing of social capital to the volume of activities, and company goals.

During the existence of the company AGA met and in a few extraordinary meetings, with the agenda approval or purchases of fixed assets. The S. C. Sarten Packaging S. R. L. organizational chart is: [pic] 2. 3. Trading partners S. C. Sarten Packaging SRL is one of the largest producers of cartons for canned food in the country, with a specialization in this area for over 4 years. During the analysis period, the rate of fixed assets recorded a relatively stable trend of decline, due in most part of not realizing the whole of the investment plans referred to be carried out.

As a percentage value, the assets restraint is relatively significant clout in the total assets from the balance sheet, which denotes a consolidation of the infrastructure company, and on the other hand a significant share of the unmovable resources of the firm. An increase in the indicator level compared with the beginning of the financial year May be a slowdown of the productive process or the conduct of the business (by increasing stocks) or an acceleration in sales through the granting of commercial credit over a long period of time or a consolidation of the immediate liquidity to the operator.

During the analysis period 2008-2010 work done by SC Sarten Packaging SRL has been some fluctuation in both ascending and descending due to domestic and foreign factors that have had influence on the activity of the enterprise. The current position on the market o