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Dc tax update_clawback tax_18 october 2011
Dc tax update_clawback tax_18 october 2011
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Dc tax update_clawback tax_18 october 2011

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Dc tax update clawback tax 18 october 2011

Dc tax update clawback tax 18 october 2011

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  • 1. New clawback tax imposed on holders of market authorization for certain drugs(Government Emergency Ordinance no. 77/2011 regarding the introduction of a tax meant to financecertain expenses in the public healthcare sector, published in the Official Gazette no. 680/2011).As of 1 October 2011, Romania has introduced a new clawback tax for companies holding themarket authorisations for drugs subsidised by the Romanian state budget, included in the relevantlists of subsidised medication under the public healthcare programs. We note that a previousversion of clawback tax used to exist in Romania in the past as well, however the previous versionof tax applied based on considerably different basis.The main characteristics of the new clawback tax are as follows: The clawback tax is due on a quarterly basis, by all companies (Romanian and foreign) holding market authorisations valid in Romania for drugs subsidised under the public healthcare system. Romanian companies are liable directly for the clawback tax, while foreign companies with no direct legal presence in Romania need to appoint a Romanian legal representative to undertake all obligations concerning this tax on their behalf (i.e. computation, declaration and payment of the tax). non-Romanian legal entities holding market authorizations valid in Romania for the above-mentioned subsidised drugs must comply, until 30 October 2011, with the following express requirements: provide the National Public Health Insurance House with a written notification containing the details of the Romanian company appointed as legal representative for the purpose of the clawback tax; we note that the legal representative appointed needs to be a Romanian company having accepted to undertake this role, acting under a power of attorney expressly granted by the foreign company in question; register with the National Agency for Fiscal Administration (“ANAF”) for the purpose of the clawback tax, via the designated legal representative. the clawback tax is computed as a percentage of total subsidies paid from the Romanian budget, in a given quarter, in relation to the subsidised drugs for which the taxpayer holds a market authorisation, as follows: Clawback tax = p% * Total subsidy paid by the state budget in relation to drugs soldDCTAX S.R.L. Contact:21 Ermil Pangrati Street, District 1, Bucharest Emilia Dragu Alina ZarzuTel: 031 229 2200; 031 229 2201; Fax: 031 229 2202 emilia.dragu@dctax.ro alina.zarzu@dctax.ro
  • 2. Since subsidies are paid from the budget depending on actual end-use consumption (i.e. retail sales made by pharmacies and hospitals), which cannot be always determinable by the holder of the market authorisation, the overall subsidies paid in relation to each drug is to be communicated by the National Public Health Insurance House directly to each authorisation holder, respectively to designated legal representatives. The clawback tax rate (i.e. percentage p% in the formula above) is also determined by the National Public Health Insurance House based on the following formula: − %= Judging by the method of computation of the clawback tax, it appears that the Romanian Government’s intention was to recover, in the form of this clawback tax, the entire excess in subsidies paid for listed drugs over the budgeted subsidies. Moreover, the computation of the clawback tax appears to have failed to take into account the fact that its taxable base includes also VAT (since subsidies paid for drugs subsidised in the public healthcare system cover their price inclusive of VAT), therefore meaning that the clawback tax applies also to VAT, breaching basic principles of taxation. For the time being though, no official action has been taken to cancel this clawback tax. the elements needed for computation of the clawback tax owed by taxpayer (i.e. the percentage p% and the total subsidy for each drug included in the subsidy list) will be communicated to the taxpayers by the National Public Health Insurance House on a quarterly basis, by the end of the month following each quarter. the clawback tax must be computed, declared and paid to the state budget on a quarterly basis, by the 25th of the second month following the quarter, starting with the total value of consumption of medicine recorded starting 1 October 2011; Bucharest, 18 October 2011DCTAX S.R.L. Contact:Str. Ermil Pangrati nr. 21, Sector 1, Bucuresti Emilia Dragu Alina ZarzuTel: 031 229 2200; 031 229 2201; Fax: 031 229 2202 emilia.dragu@dctax.ro alina.zarzu@dctax.ro

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