Tax Newsletter. No. 12 / 2006 H.R. KEY FIGURES. Employee ( %) 9.5% Contribution 2007 Employer ( %) 24.65% for particular working conditions

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1 page Tax Newsletter No. 12 / 2006 Contents: Social contributions for 2007 and HR key figures Application NORMS of the FISCAL CODE which enters in force as at 1 st January 2007 Clarification for the preparation of financial statements Amendments to the Law 31/1990 on commercial companies Taxation of capital gains on shares obtained by natural persons Correction of mistakes made when paying the tax liabilities NBR reference Interest rate for December 2006 Employment of disabled persons and contribution for their non employment Employees information and consultation Fund to guarantee the payment of staff liabilities Minimum gross monthly salary 2007 RON 390 Staff register in electronic format European health insurance card VAT- summary of main changes and last Orders issued by the Ministry of Public Finance Foreign currencies exchange rates as at 31 December Boulevard Dacia, District 2, Bucharest Tel: +40 (0) Fax:+40 (0) office@apex-team.ro January 2007 AGENDA Note that private pension funds which were due to enter in force as at 1 st January 2007 are not yet effective. GOVERNMENT DECISION 1861 dated 22 December 2006 on Implementation Norms of the FISCAL CODE (Official Gazette 1044 dated 29 December 2006) Corporate tax H.R. KEY FIGURES Contribution 2007 Employer ( %) Social security contribution 19.65% for normal working conditions 24.65% for particular working conditions Employee ( %) 9.5% 29.65% for special working conditions Medical leave contribution and 0.85% health insurance allowance Work accidents and occupational 0.5% - 4% depending on CAEN code of disease fund main activity Unemployment fund 2.25% 1% Contribution to the fund for the 0.25 % guarantee of the payment of salary liabilities Healthy insurance fund 6% 6.5% Labour office commission 0.25% or 0.75% Salary tax 16% Contributions for non employment 4 * 50% minimum gross salary of disabled persons (for (RON 390) for each 100 employees employers with more than 50 employees) Luncheon ticket RON 7.41 Minimum monthly gross salary RON 390 Average monthly gross salary (INSSE October 2006) RON 1,155 Per diem (in Romania) RON It will be taken into account for the computation of the tax value of plot of lands and of the net tax value of depreciable non current assets, the revaluations made after 1 st January 2007 as well as the portion which remains non depreciated as at 1 st January 2007 of the revaluations made between 1 st January 2004 and 31 December Taxable profit in case of liquidation represents the difference between accumulated revenues and expenses to generate them since the start of the fiscal period and takes into account : profit from the liquidation of the assets, impairment write offs, retained earnings from profit appropriation which were not previously taxed as well as similar income or expense. In case the corporate tax return for the year prior to the liquidation discloses a tax loss, it will be deducted from the taxable profit computed at liquidation. The taxation regime for the gains realised by foreign legal persons on disposal of interests or real estate properties is presented in detail in the Norms. Foreign legal persons who derive income from their real estate properties located in Romania must pay corporate tax on such taxable income. Banks will pay in 2007 corporate tax by quarterly instalments in amount of 25% of previous year corporate tax multiplied by an inflation index. Starting from 2008, it will apply to all corporate tax payers. A former provision has been cancelled: the one according to which the net book value of a

2 fixed asset was tax allowed only if the disposal of the non current asset was done by a specialised unit or by a legally organised tender. Income Tax Non taxable income Grants to support families to raise children are not taxable. Income obtained by owners/tenants from selling produce in their natural state obtained from agricultural land or forest in ownership or tenancy is tax free. Starting from 1 st January 2007, interest obtained from sight deposits/current accounts is not taxable income. Employer contributions to a private pension fund for its own employees do not represent a benefit in kind in the limit of Euro 200 per year and per member. Other provisions The tax regime for granting Gift vouchers to natural persons Nursery vouchers are tax allowed expenses both for the employee and the employer. Natural persons who have rental revenues from more than 5 renting contracts at the end of the fiscal year have these revenues qualified the following year as revenues derived from independent activities which are subsequently taxed as per this category of revenues. Natural persons who obtain revenues from activities performed based on contracts/civil agreements in accordance with the Civil Code can opt to have these revenues taxed at 16% of their gross income, the tax being final. The natural persons (or the legal person where the taxpayer performs his/her activity) who obtain salaries from abroad must submit an information return at inception/termination of such activities. This information is to be provided to the local tax authority where the natural person (or alternatively the legal person) is registered for tax purposes. A new return is to be submitted within 15 days when changes occur in the documentation related to the labour relationship. Details regarding tax computation on option, swap or forward contracts are presented. The tax base in case of dissolution without liquidation is computed in 2 steps: Computation of the amount representing the difference between the value of the assets and the liabilities of the company; Computation of the excess of the amounts computed as above over the contribution made by the natural person to the share capital. Persons who pay revenues for which an obligation to withhold the tax exists, have to declare the taxes they withheld as below: By 28 February at the latest for revenues from independent activities, salaries, disposal of shares or plots of land ; By 30 June at the latest for all other types of income. Taxation on real estate transactions Real estate transactions are taxed as below: If the real estate property was held up to 3 years: The tax rate is 3% up to RON 200,000 included; page 2 Exceeding RON 200,000, the tax amounts RON 6,000 plus 2% of the amount over RON 200,000. If the real estate property was held more than 3 years: The tax rate is 2% up to RON 200,000 included; Exceeding RON 200,000, the tax amounts RON 4,000 plus 1% of the amount over RON 200,000. In case of transfer of ownership, the tax base is the amount declared by the parties in the deed. The tax is collected by the notary and must be paid to the State Budget at the latest on the 25 th of the following month. Income tax for non residents Interests on sight deposits or current accounts are tax free, irrespective of the interest rate. Tax on the interests on term deposits, deposit certificates and other saving instruments at banks and other credit institutions is calculated and withheld by these institutions as follows: account ; At redemption in case of deposit certificates and saving instruments. Interests on loans between European Union (EU) State on interests and royalties are taxable at 10% until 2011 and will be exempted afterwards. Royalties paid by a Romanian legal person to a legal person who is resident in an EU State member under the provisions of the Directive on interests and royalties are taxable at 10% until 2011 and will be exempted afterwards. Dividends paid by a Romanian legal person to a legal person who is resident in an EU State member are tax free under some conditions which regard the legal framework and the tax residence if the beneficiary of the dividends: Holds a minimum of interests in the Romanian legal person, i.e. 15% in 2007 and 10% starting with 2009; Has been holding the minimum interests for an interrupted period of 2 years at the date the dividends are paid. The tax residence certificate which is presented by the beneficiary of Romanian income during the year the payment is made is also valid for the first 60 calendar days of the following year. Income tax for micro enterprises For 2007, the tax rate for a micro enterprise is at 2% of its income. larger than Euro 100,000 or the micro enterprise derives more than 50% of its revenues from consultancy and management, the micro enterprise will become liable to corporate tax starting from the quarter the limit was exceeded taking into account revenues and expenses recorded from the start of the fiscal year. Exceeding the threshold of 50%

3 page 3 of revenues derived from consulting and management during the fiscal year triggers effects in 2007 as per the provisions of the Emergency Ordinance 110 dated 21 December 2006 (Official Gazette 1028 published on 27 December 2006). Vehicle pollution regulation Euro per cm 3 Euro 4 0 Euro 3 0 Allocating revenues to the category of consultancy and management will be done based on an analysis of the contracts that were concluded. Excises and special taxes The regime regarding alcoholic beverage from fruits or wine produced by households for their own consumption has been regulated. All the households who own production equipment must locally register at the tax authorities of their domicile and have to declare the quantities they assess they will obtain within a year. For an output of 50 litres of produce for the household consumption, the excises which are due represent 50% of the standard rate for ethylic alcohol, i.e. Euro 375 per hectolitre of pure alcohol. Households which do not have their own production equipment but have their own fruit crop can produce alcoholic beverage for their own consumption only by contracting with fiscal warehouses licensed to produce such beverage. The licensing regulations for fiscal warehouses have been amended in function of the specificity of the activity that will be performed in their premises. Approval procedures for ordering stamps and labels for the products which are submitted to this marking system were also amended. Special tax levied for the first registration of motor vehicles in Romania: Does not apply to vehicles which are temporarily imported in Romania for a period equal to the validity period for international insurance (green card); Is paid in petty cash or bank transfer by the natural or legal person who registers the motor vehicle; Is not due for the vehicles registered after 1 st January 2007 and for which excises were paid when imported or for the vehicles purchased on the domestic market during 2006; Is not due in case of vehicles introduced in Romania based on a financial leasing contract initiated prior to 1 st January 2007 and will ceased after this date and which are liable to the excises which were in force at the time the leasing contract was initiated. The Emergency Ordinance dated 21 December 2006 (Official Gazette 1028 published on 27 December 2006) has amended the special tax due when the following vehicles are registered: Type N2 Vehicle designed and built for the transport of goods with a weight over 3.5 tons without exceeding 12 tons; Type N3 - Vehicle designed and built for the transport of goods with a weight over 12 tons; Type M2 - Vehicle designed and built for the transport of seat and a weight up to 5 tons; Type M3 - Vehicle designed and built for the transport of seat and a weight over 5 tons. The correlation factor used in the computation of the special tax has been amended. The car age set by appendix 5 of Chapter VII «excises and other special taxes» has been increased from 6 months to 1 year. Local taxes The tax on land, the tax on buildings as well as the tax on means of transport is to be paid now twice a year on 31 March and 30 September instead of the former quarterly instalments. The tax on lodgings whose area exceeds 150 mp is increased by 5% for each 50 mp or fraction. The tax on the buildings which is due by legal persons has been amended. The local authorities can set the rate for the tax on buildings from 0.25% to 1.5%. The local authorities can increase the upper limits by 20%. Starting from 1 st January 2007, the local authorities can grant commercial companies with the following tax incentives: For the investments larger than Euro 500,000 exemption for a period up to 5 years of tax on buildings and tax on land; For the investments larger than Euro 500,000 which were commissioned prior to 1 st January 2007 a tax rate reduced by 0.25% for a period of 3 years starting from 1 st January Examples are given in the Norms for the computation of tax on land and tax on buildings under different circumstances. Local taxes are indexed once every 3 years. Legal persons have to revalue their constructions every 3 years otherwise they are liable to pay the tax computed by application of a rate between 5% and 10% to the construction cost as registered in the books. TVA Fiscal Group Starting from 1 st January 2007, a fiscal group can be set up between 2 up to 5 tax payers, but this provision applies until 1 st January 2009 only to the tax payers who are considered large tax payers. The fiscal group is formed based on applications made by the group members and approved by the tax authorities. A tax payer can be member of a single fiscal group. Option has to be exercised for a period of 2 years at least. All the tax payers belonging to the group must have the same tax period. Each group member: Euro 2 0,2 Euro 1 0,9 Non-Euro 1,2

4 page 4 Will report in its VAT return any supply of goods, provision of service, import or purchase within the European Union or any other operation realized from or to itself during the tax period; Will transmit its VAT return to the Group representative as well as a copy of this return to the tax authorities to which it reports; Will not pay any VAT it is liable as per its own VAT return or will not apply for VAT refund; Will however submit the centralized statement regarding its purchases and supplies within the European Union. The Group representative: Will report in its own VAT return any supply of goods, provision of service, import or purchase within the European Union or any other operation realized from or to itself during the tax period; Will prepare a consolidated return based on all the VAT returns received from the other fiscal group members and its own VAT return for the related tax period; Will submit to the tax authorities to which it reports all the VAT returns of the fiscal group members as well as the consolidated VAT return; Will pay VAT as per the consolidated VAT return or will apply for VAT refund, if case. Foreign currency exchange rate For the supply of goods or the provision of services, contracted and charged in foreign currency, the VAT base is computed by converting in RON the foreign currency using the exchange rate communicated by the National Bank of Romania (NBR) or the exchange rate in force at the bank in charge of the transaction for the day when the VAT generating event occurs or for the 15 th of the month following the month when the VAT generating event occurred, if case. In the contracts concluded between parties, it will have to be stipulated whether the NBR exchange rate or the commercial bank exchange rate will be used to settle the transactions in foreign currency between the parties. For the advance payments collected prior to the supply of goods or the provision of services, the exchange rate used for the computation of the VAT base is the exchange rate in force on the day the advance is collected if the invoice is issued on the same day or the exchange rate in force on the 15 th of the month following the month the advance was collected, if case. In case of advance collection before the supply of goods or the provision of services, the exchange rate used for the computation of the VAT base at the date of collection of the advance payment remains unchanged at the date the operation is settled. For the supply of goods and the provision of services within Romania which are contracted in foreign currency and settled in RON at the date of payment, the exchange rate differences between the exchange rate mentioned on the invoice that is issued and the exchange rate used at the date of collection are deemed not to represent price differences. Other provisions regarding VAT The threshold for mandatory registration for the purposes of VAT has decreased to the equivalent in RON of Euro 35,000 at the National Bank of Romania exchange rate in force as at 1 st January 2007 (rounded to the upper thousand). Damaged inventories which cannot be any more sold are not subject to VAT if all the following conditions are met : They cannot be charged to an employee; They were damaged due to objective reasons which can be documented ; The proof of their destruction certifies that they cannot be put on the market. The Norms disclose how to treat the price reductions granted to the final consumer as purchase vouchers. To deal with the amounts paid by the supplier/service provider on behalf of the client is also presented in the Norms. Depending on the agreements between to the parties to recover the amount paid, it is optional to issue a debit note. If a debit note (invoice) is issued, the VAT amount will not be disclosed separately, being included in the total amount to recover. The debit note (invoice) is remitted to the client accompanied by the invoiced paid on behalf of the client, the debit note being a simple document to which the paid invoices are attached. The Norms disclose how to treat packaging as well as the guarantees which are collected for packaging. The Norms present the mandatory declarations that a dealer registered for the scope of VAT has to submit regarding its purchases and supplies with the European Union in case of triangular operations. Supply of goods in the scope of test or conformity checking has been defined. The Norms include the thresholds and the conditions under which the provisions of services rendered by independent groups of persons are VAT exempt. It has been defined the conditions under which the option to apply VAT may be exercised for concession, renting of agricultural lands, renting and leasing of real estate property (partially or totally) which are built, purchased, transformed or modernised as at 1 st January 2007 and afterwards. The option must be notified to the tax authorities. This applies also to the legal persons who opted prior to 1 st January 2007 to apply VAT to such operations: subsequently, they will have to submit the notification as per the Norms within 90 days after the date Romania joined the European Union. The conditions to obtain VAT refund for the persons liable to VAT who are not established in Romania and who are not registered in Romania for the scope of VAT are presented in the Norms. The Norms present the circumstances where the deduction right is challenged and subsequently the VAT which had been deducted has to be adjusted. Examples are given in this respect. The transition from normal regime to dual regime is also presented. By exception to the general rule, the supplier of goods or the previous supplier can opt for the status of importer for the scope of VAT. All the tax payer branches or sub units who are not legal persons have to be registered for the scope of VAT under a

5 page 5 single code. All the persons liable to VAT who were registered in Romania before 1 st January 2007 through permanent establishments have to comply with these provisions. Consequently, they will use in January 2007 as the sole registration code for the scope of VAT the registration code of one of the permanent establishments and they will request the cancellation of the VAT codes of the other permanent establishments. Any tax pay registered for the scope of VAT who notes that only operations with no right for deduction have been performed has to deregister within 10 days after the end of the month when only transactions without deduction right occurred. Starting from 1 st January 2007, the following transactions are subject to VAT: factoring (however, the tax base is not clearly defined), collection of debts, management and deposit of securities, interests on the financial leasing contracts (transitory regime), the new sale contracts by instalments. The Norms present in detail the circumstances where the transitory provisions regarding VAT apply and provide examples in this respect. Invoice The invoice is prepared in Romanian but can eventually be prepared also in another language. The tax base can be disclosed in foreign currency but in case the transaction is not VAT exempted, the VAT amount has to be mentioned in RON. In case the designation of the goods or the services cannot be disclosed on a single page, the identification data of the invoice will be shown only on the front page. Each page shall bear a page number. It is not any longer mandatory to sign or to stamp the invoice. A summary invoice for several separate supplies of goods or provisions of services can be prepared if all the following conditions are met: It refers to supplies of goods and/or provisions of services to the same client and their generating events for the scope of VAT occurred during a period shorter than the calendar month ; All the documents which were issued at the date of the delivery of goods or the provision of services must be attached to the centralised invoice. The Norms present the conditions under which the invoice can be issued by the purchaser in the name of the supplier as well as how invoices remitted by electronic mail can be used. Both invoiced issued and received can be stored in electronic format under the condition they can be put without delay at the disposition of the tax inspectors upon request. The Norms present the conditions under which the invoice can be issued by a third party in the name and on behalf of the supplier/service provider and when simplified invoices can be prepared. Mandatory ledgers Ledger of the tangible goods received which were transported from another State member by a person registered for the scope of VAT in the same other State or by another person in its name for the purpose of test or for operations to be processed on the goods, unless an Order of the Ministry of Public Finance does not make it mandatory. This ledger includes: Number for each caption; Date of reception of the items; Name and address of the receiver; Registration code for the scope of VAT of the receiver; Quantity of received items; Description of the received items; Date of transport of the items after expertise or of the processed goods transmitted to the client; Quantity and description of the items which are not returned to the client; Quantity and description of the items which are returned to the client after processing; A reference to the documents that were issued in relation with the services registered as well as the date of issue of these documents. Ledger for the non transfer of goods transported by a tax payer or by another person on behalf of the former outside Romania but within the European Union. The ledger for the non transfer of goods includes: description of the items, quantity, circulation and value of the goods, description and quantity of the goods which were not returned and a reference of the documents issued when these operations occurred as well as the date of issue of these documents. This Ledger shall not be filled in for the following items: Means of transport registered in Romania; Palettes, containers and other packaging which circulate without invoice; Items necessary to the press, radio and television activity; Items necessary to exercise a profession or craft if the price or nominal value of each item taken separately does not exceed Euro 1,250 Euro at the time the item is transported or sent in another State member and under the condition that the item is not used more than 7 days outside Romania; or if the price or nominal value of each item taken separately does not exceed Euro 250 at the time the item is transported or sent in another State member and under the condition that the item is not used more than 24 months outside Romania; Laptop computers and any other similar professional equipment which are transported outside Romania by a member of an enterprise or a licensed natural person. Ledger of capital items for the banks and the investment funds Sales Ledger, Purchase Ledger, ledgers and the other similar documents used in business by the tax payer will be maintained in a way it ensures the disclosure of the following captions:

6 Total amount (VAT excluded) of all the supply of goods and/or provision of services which were made by the tax payer during the tax period, with the breakdown in: supply of VAT exempt goods within the European Union; export of goods and other VAT exempt operations; operations which did not take place in Romania; supply of taxable goods and/or provision of taxable services to which different tax rates apply. Total amount (VAT excluded) of all the purchases during the tax period, with the breakdown in: movable tangible items; services; capital items; purchases of goods from the other EU State members; imports for which the tax payer uses the derogatory regime as per the provisions of the article 157 point (4) of the Fiscal Code; other operations for which the tax payer has to pay VAT as per the provisions of the article 150 point (1) lit. b) - g) of the Fiscal Code. Output VAT for each tax period; Total of Input VAT and the amount of VAT deducted for each tax period; In case of the deduction rights are subject to a prorata: the computation of the VAT temporarily deducted by the tax payer as well as the adjustments subsequently made. The following will be disclosed: the amount of VAT that is finally deducted, the amount of VAT which is not deducted and the amount of VAT which was finally deducted based on the final prorata. The persons who apply the VAT special exemption regime have to track the supply of goods and provision of goods which would have been taxable if made by a micro enterprise. For this purpose, they will maintain a sales ledger and a purchase ledger. The ledgers and journals mentioned above are not standard forms ruled by the Ministry of Finance. Each tax payer is free to define the format of the documents which it will use to determine Output and Input VAT depending on its activity. However, these documents must provide at least the information set in the Norms for the applications of the Fiscal Code. Returns regarding supply/purchase of goods within the European Union Although they are not any longer subject to customs declaration, all supplies and purchases between the State members of the European Union must be included in a quarterly return. This return is submitted on line tration code for the scope of VAT must be obtained and checked by using the VIES data base page 6 ORDER 2001 dated 22 November 2006 to amend the OMFP 1.752/2005 approving the accounting regulations in conformity with the European Directives (Official Gazette 994/2006) This Order provides clarification for the preparation of the disclo- regarding corporate governance, transactions with related parties, internal control. LAW 441 dated 27 November 2006 amending the Law 31/1990 on commercial companies and the Law on the Trade Register (Official Gazette 955/2006) This Law introduces significant changes which will be presented in APEX Team Newsletter 1_2007. Among these, it is now mentioned the following: The share capital of a «S.A.» cannot be less than RON 90,000. The number of shareholders in a joint stock company cannot be less than 2. To enable several companies to operate at the same registered headquarters, at least one of the following conditions must be met: The structure of the building by itself allows each company to have different premises within the building; At least 1 person is a shareholder in each of the companies; At least one of the shareholders owns the building where the company registered headquarters will be located. The Law defines 2 modes for the company management: The unitary mode by Director/Board of Directors; The dual mode when the company management is done by an Executive Board and a Supervisory Board. The sole shareholder of a limited liability company can be an employee of the «SRL» in which he/she is the sole shareholder, excepting the case where he/she is the sole Director or member of the Board of Directors. INSTRUCTION 7 dated 17 October 2006 amending the Instruction 12/2005 to determine, withhold and pay the capital gain obtained by natural persons on disposal of shares (Official Gazette 969/2006) ORDER 2089 dated 6 December 2006 to approve the Procedures to correct mistakes in the drafting of payment documents by the tax payers (Official Gazette 1043/2006) INSTRUCTION 24 dated 28 November 2006 to withdraw ROL from circulation (Official Gazette 989/2006) As at 1 st January 2007, ROL bank notes and coins are withdrawn and cannot be any longer used as means of payment. INSTRUCTION 25 of the National Bank of Romania (NBR) issued on 4 December 2006 regarding the reference interest rate for December 2006 (Official Gazette 908/2006) For December 2006, the NBR sets the reference interest rate at 8.75% per annum.

7 ORDER dated 8 December 2006 on the amount and the deadline for payment of the license tax due by the insurers and the insurance brokers (Official Gazette 1030/2006) ORDERS and dated 21 December 2006 to implement Norms regarding the form and content of reports to be prepared by the insurance/reinsurance brokers (Official Gazette 1053/2006) LAW 448 dated 6 December 2006 to protect and to promote disabled persons (Official Gazette 1006/2006) The Law abrogates the Government Emergency Ordinance 102/1999 on special protection of disabled persons and their employment. Among the main amendments, note: Starting from 21 December 2006, legal persons, public or private, who have more than 50 employees must employ disabled persons in a percentage which cannot be less of 4% of their headcount; The legal persons who do not recruit disabled persons have to opt to meet one of the following conditions: To pay monthly to the State Budget an amount which represents 50% of the National monthly gross salary multiplied by the number of positions for which disabled persons were not recruited ; To purchase products or request the services of licensed protected units through a partnership for the amount equivalent to the amount that would have been paid in the option mentioned above. A protected unit can be set up by any natural or legal person, public or private who recruits disabled persons. The licensing procedures will be defined by Order of the President of the National Authority for Disabled Persons; The employers of disabled persons benefit from the following: On computation of their taxable profit, amounts related to the adaptation of the work positions to disabled persons are tax deductible as well as the purchase of tools and equipments used by the disabled persons in the production process; On computation of their taxable profit, transport expenses of disabled persons from home to work are tax deductible as well as the transport of raw materials to their domicile and finished products from their domicile in case the disabled persons work at home; The reduction of their contributions to unemployment insurance with the amounts which are dedicated to preparation, training, professional orientation and recruitment of disabled persons; A State grant as per the provisions of the Law 76/2002 on unemployment insurance. This Law enters in force on 1 st January 2007, the National Authority for Disabled Persons issuing within 60 days implementation Norms. page 7 LAW 467 dated 12 December 2006 to set the general framework regarding information and consultation of the employees (Official Gazette 1006/2006) This Law applies starting from 1 st January 2007 to all companies which have their registered headquarters in Romania and have at least 20 employees. sentatives on the following: The recent evolution and the future of the activity as well as the financial position of the enterprise; The situation of the employment within the enterprise, its structure and probable evolution as well as the contemplated measures if any, especially when employment may be threatened; The decisions which may lead to significant changes in the work organization, in contractual relations or labour relations, including those addressed by the Romanian legislation in respect of information and consultation in case of collective dismissal and in respect of the pro- of the enterprise. The employer is not obliged to provide information or to undertake consultation if this may be severely damageable to the en- consultation must be motivated. DECISION 1850 dated 21 December 2006 to approve the Implementation Norms of the Law 200/2006 on setting up and utilisation of the Fund to guarantee the payment of salary liabilities DECISION 1825 dated 21 December 2006 to set the minimum gross salary (Official Gazette 1025 dated 22 December 2006) Starting with 1 st January 2007, the minimum gross salary is RON 390 per month. For a full time job for an average of 170 hours per month, it represents RON per hour. LABOUR REGISTER in electronic format As per the provisions of the Government Decision 161/2006, starting from 31 December 2006, the employer must maintain a labour register in electronic format for all its employees and to transmit it to the Labour Inspectorate of its registered headquarters or domicile at the latest on 30th January It applies to any employer having at least one labour contract in progress, even if suspended. The register in electronic format is maintained by the employer using the application provided free of charge by the Labour Inspection EUROPEAN INSURANCE CARD The European insurance card is ruled by the Law 95/2006 on the reform of the health system. It provides its holder the right to health treatments which appear deemed necessary during the temporary stay in an European Union State member (a temporary stay means for a person staying up to 6 months in an EU State member for tourism, studies, professional or familial reasons). expenses by the Health House the person is insured in case of temporary stay of the insured person in an EU State member.

8 page 8 TVA 2007 MAIN CHANGES Prior to 31 st December 2006 After 1 st January 2007 Imports from State members/ Exports to State members Lohn operations with State members Customs warehouses VAT regime applicable to the commerce between State members The supplies within EU are VAT exempted with the deduction right in Romania on the proof of the transport and the New regime for the purchases from EU: Purchases / Supplies within European Union VAT regime regarding the circulation of goods Consignment stocks or at Special regimes new means of transport noi, excisable goods, distance sales taxation in Romania in the case of companies registered for the scope of VAT (reverse taxation); taxation in the State member of origin in the case of companies not registered for the scope of VAT and annual value of the purchases from EU less than Euro 10,000; Taxation in Romania in the case of new means of transport and of excisable goods. Transfer of goods it represents the transport of goods between 2 State members without transmission of goods ownership: in the State member no. 1 the transfer is considered to be a supply within EU in the State member no. 2 the operation is considered to be a purchase within EU reverse taxation the owner has to register for the scope of VAT in the State member no. 2 (where the goods purchaser is located). Goods in inventories in another State member: implies the transfer into the State member of origin; the purchase within EU is deemed to be in the State member of destination a local purchase, the operation is considered a purchase within EU followed by a local supply; the supplier has to register for the scope of VAT in the State member of destination, excepting the circumstances where both the State member of origin and the State member of origin apply the simplification dispositions. Non-transfer it represents the transport of goods between 2 State members without transmission of ownership and cannot be therefore considered a supply / a purchase within EU: work processing on goods in another State member under the condition that the goods are returned to their State of origin temporary use of goods in another State member in the scope of service providing (ex: leasing) transmission of goods in the scope of tests or conformity checking (for 24 months at a maximum) Special regimes New means of transport and excisable goods VAT is due in the State member of destination New means of transport represent means of transport which are delivered up to 6 months after start of operation or which have less than 6,000 km the purchase within EU is taxable in Romania (whoever the purchaser is). Distance sale: It represents a supply within EU which implies the transport of the goods from a State member to another State member by the supplier or on its behalf, but the client is either a non taxable legal person, a small enterprise, a tax payer who makes exclusively exempted operations without deduction right or a natural person. If the sales made in Romania by the supplier located in a certain State member exceed the threshold stipulated for distance sales, it is considered that all the sales made by the supplier located in this particular State member were done in Romania for the period which remains for the calendar year during which the threshold is exceeded and for the next calendar year. The person who is liable to the VAT payment is the supplier of the other State member and its registration for the scope of VAT is mandatory in Romania. In case the supplier is a company located in Romania and the threshold for distance sales set by the other State member is not exceeded VAT is paid in Romania, if the threshold set by the other State member is exceeded, the supplier must register for the scope of VAT in this other State member. The threshold for distance sales is Euro 35,000 calculated in RON at the National Bank of Romania exchange rate on the last working day of the previous year. Import/export operations The VAT payment on the imports of goods is made by reverse taxation in the case of the persons who are registered for the scope of VAT. The new documents to justify the exemption in case of export are as follows: Export declaration which includes the name of the supplier in its status of exporter (stamped by one or 2 customs authorities) Contract, documents of transport and of insurance; Copy of the invoices. Domestic supplies Deadline to issue the invoice: at the latest the 15 th working day of the following month

9 Delivery based on expedition note/invoice It is now possible to issue a summary invoice. VAT on services rendered by non residents Self invoicing is not any longer necessary, except for the case the beneficiary does not receive the invoice in due time. The location where the service is rendered depends on the nature of the services rendered as follows: Services of transport and transport accessory services If the beneficiary communicates its registration code for the applicable. If the beneficiary is located in Romania, reverse taxation applies. If the beneficiary does not communicate its registration code for the scope of VAT: VAT of the State member where the transports starts; VAT of the State member where the transport accessory services (for instance logistics) are effectively rendered. Bank financial operations Exempted operations without VAT deduction right; Factoring and collection of debts become taxable operations; Leasing Type of service Services rendered regarding movable goods (repairs), services accessory to transport Services of transport within EU Services rendered regarding immovable items Consultancy services, staff supply, software Training services Location of the provision of service VAT in the State member where the services are effectively rendered or VAT in member VAT in the State member the transports starts or VAT member Place where the immovable items are located State member VAT in the State member where the services are effectively rendered The leasing of corporal movable items except of means of headquarters are located ; The leasing of means of transport performed by service providers located in EU is taxed at the place the service The leasing of means of transport performed by service providers which are not located in EU is taxed at the place they are effectively used; The interests related to the leasing contracts concluded after 1 st January 2007 are in the scope of VAT. New VAT regime for real estate transactions Exempt operations without deduction right page 9 Sale of old constructions and of any plot of land where constructions cannot be built Leasing on immovable property Rental Taxable operations VAT 19% Sale of new constructions and of plot of lands where constructions can be built Simplification provisions Taxable operations upon option Sale of immovable property Leasing on immovable property Rental Notification to the tax authorities for each construction/plot of land considered separately The notification must be submitted before VAT is applied Deduction right Deduction right must be adjusted in case of change in the destination of immovable assets : sale, rental, leasing Adjustment period 20 years: Construction Acquisition Transformation or modernisation (20%). Prorata Prorata is rounded (no decimal) The following are not taken in account when the prorate is computed: Supplies of capital items used in the economic activity Occasional transactions The Other income such as dividends, penalties Reorganisation operations VAT does not apply to part or full transfer of assets (sale, contribution in kind, spin off, merger) Partial transfer represents the transfer of a section/division of the business The beneficiary takes over also the deduction rights of its predecessor Invoicing The invoices and expedition notes under special tax regime disappear

10 Deadline for invoicing: the 15 th working day of the following month (domestic supplies, provision of services) New regulations summary invoice issue of the invoice by the client in the name of the supplier electronic invoicing electronic archiving VAT group Possibility to consolidate the VAT position within companies within the Group it avoids to be in a position to have to apply for VAT refund Journals and returns Journals regarding VAT (monthly) No standard form Minimum mandatory disclosures are set VAT return Summary of the purchases and the supplies within the European Union Ledger of the non transfers Ledger of the goods received Ledger of the capital items INTRASTAT statement (supplies & purchases). Refund of VAT from other States From EU (Directive 8-a) The person who request the refund cannot perform taxable operations in this same State The application for refund must be accompanied by the invoices in original From other than EU (Directive 13-a) It is based on reciprocity. ORDER 2157 to organise the administration of the non resident tax payers who do not have a permanent establishment in Romania (Office Gazette 1053/2006) ORDER 2135 dated 12 December 2006 on the registration of the economic operators who will introduce in Romania from the European Union excisable products after 1 st January 2007 (Official Gazette 1029/2006) The economic operators who introduce from other EU state members excisable products and who wish to proceed after 1st January 2007 must register for this scope. This also applies to the economic operators who intend to do such purchases after 1st January ORDER 2189 dated 19 December 2006 to approve the Decision 7/2006 taken by the Central Tax Commission (Official Gazette 1043/2006) The import of software under IT format is deemed to be an import of goods for the scope of VAT. page 10 ORDER 2216 dated 22 December 2006 to approve the Instructions for the application of simplification provisions regarding the transfers and the deemed purchases within EU as per article 128 point (10) and article point (2) lit. a) of the Law 571/2003 Fiscal Code ORDER 2217 dated 22 December 2006 to organise VAT evidence as per article 156 point (1)-(3) of the Law 571/2003 Fiscal Code ORDER 2219 dated 22 December 2006 to approve the Norms to set the licensing procedures and the conditions under which a warehouse can be authorised for the scope of VAT as per article. 144 point (1) lit. a) 8 of the Law 571/2003 Fiscal Code ORDER 2220 dated 22 December 2006 to approve the Norms to exempt the final imports of some items of the VAT and excises payment as per article 142 point (1) lit. d) and per article 199 point (3) of the Law 571/2003 Fiscal Code ORDER 2221 dated 22 December 2006 to approve the Instructions to apply simplification provisions regarding transfers and deemed purchases within EU as per article 128 point (10) and per article point (2) lit. a) of the Law 571/2003 Fiscal Code in respect of multiparty EU operations related to works performed onto moving tangible items ORDRE 2222 dated 22 December 2006 to approve the Instructions for the application of the VAT exemption for the export operations and the international commerce of goods (Official Gazette 1043/2006) NORM dated 21 December 2006 for the application of Emergency Government Ordinance 102/2005 on the free circulation in Romania of the foreigners from the European Union and from the European Economic Space. Main FOREIGN EXCHANGE RATES at the end of financial year 2006 JANUARY AGENDA Everyday - do not forget: 1 EURO = RON 3, USD = RON 2, GBP = RON 5,039 1 CHF = RON 2,1044 to fill in the petty cash register (or to print the electronic version) to fill in the purchase ledger and the sales ledger At month end - do not forget: to fill in the journal ledger; to organize stock count of the assets if the enterprise does not use permanent inventory system to issue the last invoices for the month of January 2007 (but be aware that the new deadline of the 15 th of the following month applies) To meet the new requirements regard VAT (see above): Mention on the documents at destination of EU business partners the registration code for the scope of VAT Maintain the ledger of the goods received

11 Maintain the ledger of the non transfer of goods Remit to the tax authorities the option for VAT for rentals even if previously notified Use a single registration code if several were previously used in case of permanent establishments and deregister for the codes that phased out Mention in the contracts with foreign partners which exchange rate will prevail (NBR or commercial bank) During the month - do not forget: That Wednesday 10 January is the last day to submit: Return on collection of hotel tax That Wednesday 10 January is the last day to pay: Hotel tax Tax on advertising services That Monday 15 January is the last day to submit: A statement under own responsibility by the tax warehouse licensed to produce beer on their production capacity. That Thursday 25 January is the last day to submit: State budget liability return (code100) VAT return (code 300) Social security statement with list of insured persons List of insured employees and health contribution to social health insurance fund Unemployment fund statement with list of insured persons Tax return on the commission due by employers to the Labour Inspectorate (ITM) Special VAT return for VAT non payers (code 301) Statement for income obtained from abroad by natural persons who perform an activity in Romania and by Romanian citizens who are employees of diplomatic missions and consular posts accredited in Romania (form 224) Environmental Fund Statement Provisory VAT prorata for fiscal year 2007 and how it has been computed Information regarding the turnover realised in 2006 in 2006 and adjusted eventually by the tax payers who have to submit VAT quarterly returns. That Thursday 25 January is the last day to pay: Excises Tax on crude oil and natural gas from domestic production Withholding tax on non residents income VAT Salary tax Tax on income from independent activities, withheld at source Tax on income from interests Tax on income from investments Tax on income from pensions Tax on income from premium and gambling Tax on income from other sources Social security contribution Unemployment fund Health fund page 11 The commission for holding and filling in the Labour books Work accidents and occupational diseases contribution Contribution for non employment of disabled persons for the employers having more than 50 employers (the amendment entered in force as at 21 December 2006) Environmental fund Gambling tax That Tuesday 30 January is the last day to: Transmit to the Labour Office (ITM) the personnel register maintained in electronic format That Wednesday 31 January is the last day to submit: The option to become a corporate tax payer in case the micro enterprise decides to renounce to the micro enterprise taxation regime; revenue derived from independent activities, i.e. an estimation of the rental revenues assessed by the tax payers who opt for the determination of their revenues under the real regime; The returns to the local authorities based on which tax on land, tax on constructions, tax on means of transport will be computed for any tax payer; the users of vehicles or building based on a financial leasing contract have also to comply with this obligation. That Wednesday 31 January is the last day to: Fully pay the special tax on temporary registration of means of transport in Romania by the user, foreign natural or legal person who requests it, in case the registration is requested for a period after the 31 st December of the tax year during which the registration is requested, as follows: The annual tax if the registration refers to a fiscal year; The tax related to the period from 1 st January and the 1 st of the month following the month the registration expires in the case the registration refers to a period which ceases before 1 st December of the same year. IMPORTANT All forms mentioned above as well as guidance for their preparation can be downloaded from the Ministry of Public Finance web-site: As per the provisions of the OMFP 2235 dated 28 December 2006, the serial numbers of the payment orders to the State orders to the State Budget which were considered deemed to be returns in the forms 100, 101, 300, 710 and related OPT. These amendments apply also to the returns related to December The last version of the application ( ) to prepare the returns can be found on the same website.

12 page Boulevard Dacia, District 2, Bucharest Tel: +40 (0) Tel: +40 (0) Fax:+40 (0) Site: APEX team includes qualified professionals able to provide full range of accounting and payroll services. Our consultants are ready to share the knowledge and experience they have gained working in Romania as consultants in one of the Big 4 international companies, having as clients many international companies acting in a wide range of industries. The team includes chartered accountants (Romanian Chartered Accountants Body and also ACCA) specialized in assistance of the accounting function of companies, as well as a team specialized in payroll administration on behalf of the client. We provide full range of accounting services, payroll services, local tax compliance and tax advice, services tailored to your company needs: Start up services Organization of the accounting function ACCOUNTING AND PAYROLL EXPERT TEAM Bookkeeping Recurrent accounting assistance Accounting and tax advice «on line» Payroll computation and additional services Assistance in implementation of information systems Training The above information is a short summary of recently published information and is not intended to be advice on any particular matter. APEX Team International disclaims liability to any person in respect of anything done in reliance of the contents of these publications APEX APEX Team Team International