Recent developments in Romanias 1% Law

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Recent developments in Romanias 1 Law

• Horia Terpe, D.A. Alliance, Romania

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Law 571/2003, Title III. The income tax, Chapter
X. The annual global income tax, Article no. 90.

• (2). The taxpayers may decide upon the
  destination of an amount representing up to 1 of
  the owed annual income tax for the sponsorship of
  the non-for-profit entities which function in the
  conditions of Governments Ordinance no. 26/2000
  regarding associations and foundations, with the
  later modifications and completions.
• (3). The obligation to calculate, to keep and to
  transfer the amount representing up to 1 of the
  owed annual income tax belongs to the employer or
  the competent fiscal administration, as the case
  is.
• (4) The application procedure of the provisions
  contained by paragraphs (2) and (3) is to be
  established through an order of the minister of
  public finances

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3 proposals for systems of application

• 1. The vouchers system, Sinaia, 2004
• 2. The classical/Hungarian simplified system,
  Bucharest, 2004
• 3. The Minister of Finances diversion,
  Bucharest, a week ago

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A. Vouchers-based system

• 1.(1) The employer has the obligation of
  calculating the amount representing 1 of the
  annual income tax for the taxpayers who do not
  have other sourses of income and are not
  subjected to the global income tax.
•  
• (2) The fiscal form 1 will contain in Ch. VI a
  new section, 7.1, named Directing 1 which is
  going to cuantify the 1 out of section 7 Annual
  Income
•  
• 2. (1) The obligation of calculating the amount
  representing 1 of the income tax for the
  taxpayers who globalize their income belongs to
  the respective fiscal authority.
• (2) The decision of annual imposition will
  contain a new section, 13.1 Directing 1 which
  will cuantify the 1 out of section 13 The
  global annual income tax.
• (3) After receiving the declarations of income,
  the fiscal authority will calculate for each
  taxpayer the amunt represented by 1 of the
  income tax.
•  

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• 3. (1) The amount might be directed toward a
  number of beneficiaries equal with the full
  number plus one of the division between the
  amount representing 1 of the annual owed tax of
  a taxpayer and 1,000,000 lei.
• (2)   Thus, if 1 of the owed annual tax
  represents an amount below 1,000,000 lei , the
  taxpayer may donate toward a single
  non-for-profit entity if 1 represents between
  1,000,000 and 2,000,000, the taxpayer may donate
  toward two non-for-profit entities between
  2,000,000 and 3,000,000 toward three
  non-for-profit entities, and so on.
•  
• 4. (1) For the respective amount, the fiscal
  authority will issue vouchers, called Civic
  Participation Talons (CPT) for each resulted
  amount of no more than 1,000,000 lei, a single
  voucher will be issued. For amounts of more than
  1,000,000 lei, a voucher will be issued for each
  million and another voucher for the remaining
  amount, below a million.
• (2) CPTs are valid for a year from the date of
  their issuance date.
•  
• 5. (1) The fiscal authority will print on each
  CPT the following information
• The name and adress of the taxpayer.
• The type and number of his ID.
• The amount of representing the value of the
  voucher, according to section 3 above.
• Date of issuance and expiration.
• (2) For ensuring confidentiality they will be
  empty spaces to be completed with the following
  information
• Name, adress and the fiscal code of the
  non-for-profit organization to which the amount
  is adressed.
• The option of requesting or not the protection of
  anonimity by the beneficial non-for-profit
  organization.
• Signature.
•  

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6. CPTs will be distributed inside the letter
containing the decision of imposition for the
taxpayers which submitted the globalization
declaration, and separate for the rest of the
taxpayers.  7. (1) The taxpayers will fill out
the necessary information and will sumitt or
transmit the CPTs to the non-for-profit
organizations which they wish to support. (2)
The expiration date for submitting the CPTs is
the expiration date written on them.  8. (1)
The non-for-profit organizations will raise their
amounts from the Financial Offices where they
belong, against their CPTs. (2) The
non-for-profit organizations will prezent a copy
of the registration number of thei annual
financial declaration for the previous year and a
legal copy of their certificate of legislation.
(2) The Financial Offices will transfer the
amounts in the account mentioned on the CPT in
maximum a month after their receival.  9. The
Minister of Finances will centralize and publish
the list of the non-for-profit organizations
which receive through this system donations of
more than 5000 Euro equivlent.  10. All
information regarding this system are subjected
to the provisions of Law 544/2001 regarding the
free access to information of public interest.
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The classical/Hungarian simplified system

•  
• The amount might be directed toward a number of
  beneficiaries equal with the full number plus one
  of the division between the amount representing
  1 of the annual owed tax of a taxpayer and
  1,000,000 lei.
• Thus, if 1 of the owed annual tax represents an
  amount below 1,000,000 lei, the taxpayer may
  donate toward a single non-for-profit entity if
  1 represents between 1,000,000 and 2,000,000,
  the taxpayer may donate toward two non-for-profit
  entities between 2,000,000 and 3,000,000 toward
  three non-for-profit entities, and so on.
• The taxpayers for which the employer has the
  obligation of annually setting the income tax are
  compelled to transmit to the taxpayer, in the
  period between 1-15 January of the year following
  the one for which the tax is determined, the
  option regarding the disposition upon an amount
  representing 1 of the annual income tax for the
  purpose of sponsorship, according to the
  provisions of art. 90, section (2).
• The employer will calculate the amount
  represented by 1 of the annual tax income and
  will provide this information to the taxpayer,
  prior to the period mention above.
• The option will be stated on a simple piece of
  paper or on a special form (regardless) and will
  be considered valid if it contains the following
  information
• The first and second name and the adress of the
  taxpayers.
• The type, seria and number of his/her ID.

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• The amount represented by 1 of the annual income
  tax, accoring section 3 above.
• Whether the taxpayer wishes to exercise his/her
  right to decide upon this amount.
• The name, adress and account number of the
  non-for-profit entity to which the taxpayer wants
  to adress the amount.
• If the taxpayer is requesting or not to have his
  privacy protected by the beneficiary
  non-for-profit entity.
• The date and signature.
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• The taxpayer will enclose his option in a simple
  envelope, provided by the employer, write his
  name on it, close it and sign along the opening,
  and then it will give it to the employer.
• The employer has the obligation of transmitting
  the envelope to the fiscal authority, in the same
  time with the income statements, not later than
  the last working day of February.
• The employer has the obligation of not exercising
  any presures against the taxpayer, ensuring the
  confidentiality of his option, and of not opening
  the envelope. The envelope is assimilated to
  corespondence and its confidentiality is
  protected by article 195 of the Penal Code.
• For all the categories of taxpayers, others than
  the one foreseen by section 2 above, the option
  regarding the disposition upon an amount of 1 of
  the annual income tax will be submitted to the
  fiscal authority in the same time with the
  statement of global income, up to the legal term
  for this purpose.
• The fiscal authorities will cumulate and transfer
  the amounts to the non-for-profit entities, in
  maximum a month after the limit of submitting the
  declarations.

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• Medium term
• NGOs preparing for campaign
• Long term
• To increase the level from 1 to the initially
  proposed 2.
• To implement the policy of progresive
  externalising services currently offered by the
  state many of these services being feasible to
  be contracted to various NGOs.
• To monitor the functioning of the system in its
  first year of actual application (2005 - for the
  taxes due for fiscal year 2004) and to design and
  implement eventual adjustments.
• Assumed in the Program for Governing of the
  D.A. Alliance