Romanian tax authorities scrutinize 2,800 firms to identify possible profit transfers
The National Agency for Fiscal Administration (ANAF) in Romania has initiated a significant audit aimed at scrutinising the compliance of 2,768 companies with transfer pricing rules and combating base erosion and profit shifting (BEPS). The exercise, which ran from July 17 to August 29, 2022, was a crucial step in ensuring that the profits reported by these companies accurately reflect economic reality and are not artificially shifted to low-tax jurisdictions or unrelated entities to minimise tax liabilities.
During this verification procedure, ANAF reviewed the companies' transfer pricing documentation, intercompany transactions, and related financial data to detect signs of profit shifting. The aim was to ensure that cross-border transactions among related parties were priced at arm's length. This audit is essential for maintaining tax base integrity and aligning Romanian corporate taxation with international standards, particularly in the context of BEPS measures advocated by the Organisation for Economic Co-operation and Development (OECD).
While the specific procedural details and findings of this ANAF audit are not yet publicly available, such exercises typically involve several stages, including the identification of companies with significant cross-border related-party transactions, the collection and review of transfer pricing documentation supporting pricing policies, a risk assessment to select companies for detailed inspection, on-site or desk audits to verify compliance and detect any profit shifting, and the initiation of control actions in cases where there are suspicions of unjustified profit transfer outside the country.
This profit shifting verification period marks ANAF's intensified efforts to enforce transfer pricing regulations and ensure proper tax revenue in Romania. The verification process covers the periods 2020 to 2024, making it the first analysis of this type to be carried out in Romania by ANAF. It is also a complementary analysis to SAF-T.
In addition to this specific audit, ANAF is undertaking a broader transformation process that includes digitalisation and a strategic direction to ensure fair tax treatment for all taxpayers. This transformation process involves the centralisation and consolidation of available global data with disaggregated information declared directly by large and medium-sized taxpayers. The way companies declare profits obtained in Romania and pay their tax obligations is a major priority for analysis by ANAF.
The objective of this transformation process is to improve the understanding of tax obligations and profit declarations of companies in Romania, as well as to better understand transfer mechanisms within multinational groups. ANAF is committed to ensuring fair tax treatment for all taxpayers and will continue to take necessary measures to combat tax evasion and ensure compliance with fiscal regulations.
[1] [2] [3] [4] [5] (Sources for general Romanian tax matters, VAT rules, or international tax topics unrelated to this event)
The audit conducted by ANAF, focusing on transfer pricing rules and BEPS measures, pertains to the finance and business sectors of the 2,768 companies under scrutiny. Thisverify process aims to ensure that cross-border transactions among related parties are priced fairly, aligning with international standards.
