Business Taxation Project

Chapter I. Theoretical considerations

1. General considerations regarding taxes

To tax (from the Latin taxo; "I estimate", which in turn is from tangō; "I touch") 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.

Taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid labour). A tax may be defined as a "pecuniary burden laid upon individuals or property owners to support the government [ ] a payment exacted by legislative authority." A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [ ] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."

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. 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.

In modern taxation systems, taxes are levied in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as the National Fiscal Agency (ANAF) in Romania, or Her Majesty's Revenue and Customs (HMRC) in the UK. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration) may be imposed on the non-paying entity or individual.

2. Presentation of direct taxes

In the general sense, a direct tax is one paid directly to the government by the persons (juristic 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.

In Romania the corporate tax rate for 2010 is 16%. Certain small companies pay tax of 3% of their turnover. A minimum is imposed on companies if the annual tax payable is less than the minimum tax fixed by the tax authority. Romanian companies and individuals pay tax on their Romanian and worldwide income.

In comparison corporation tax in the United Kingdom 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 April 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 modernising 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).

3. Presentation of 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.

Chapter II. Company presentation

S.C. MAU TRANS S.R.L.

1. Short history

S.C MAU TRANS S.R.L. is a corporation that is set up and develops its activities on the basis of the provisions of law 31/1990 which refers to commercial enterprises.

The company is founded in 1998, according to the incorporation document legalized and registered to the Trade Register Office, having 50000 ROL as capital, divided in 50 shares, each of 1000.

The distribution of shares by the 3 partners of the enterprise is as follows:

-1st partner-40%, meaning 20 shares

-2nd partner-20%, meaning 10 shares

-3rd partner-40%, meaning 20 shares

The social capital subscribed was entirely paid by its partners and it had the following structure:

Cash at bank(Bank Accounts)- 60%, meaning 30000ROL

Inventories-40%,meaning 20000ROL

The company’s object of activity is the national and international transport of merchandise. During the period of developing its activity, the company had registered an ascending trend and this is the reason why it expanded its field of activity by concluding new contracts with business partners from all over the world.

In the last period, the company has registered a profit which represents a success while the goal of the company is actually that of making profit by assigning the profitableness criteria to contracts.

At the beginning of 2003, the opening of a new store of non-alimentary products was a new source of increasing the company’s profit.

Taking into account the above-mentioned, I have to mention that the company is paying income tax, even if it does not fit the conditions of O.G.24/2001 concerning small enterprises. The company can be classified in the category of Medium-Sized Enterprises.

Acest referat a fost prezentat La Facultatea de Stiinte Economice din Brasov, Business Administration, a Universitatii Transilvania.