Loredana Marlen DUMITRU

Tax measures applicable to gambling organizers during the emergency period

By Loredana Dumitru, Junior lawyer, C.A. LUCA Mihai Catalin

Considering the fact that still, following the establishment of the state of emergency throughout the territory of Romania, regarding the organizers of gambling of type land-based, there are still issues that require clarifications, especially regarding the documents based on which they carries out its activity, the payment obligations related to them and not only, we have proposed on this occasion to analyze the main incidental measures, in the field of tax law especially, which the state of emergency implies.
Thus, following the suspension of traditional gambling for the entire period of the state of emergency decreed and given the measures that came after the suspension, measures that had strong implications in terms of identifying optimal solutions for both the gambling organizers. whose activity was interrupted, as well as for their contractual partners, on the one hand, and the employees affected, on the other hand, we consider that it is necessary, given all these events and in order to ease the task of the operators, to surprise in the content of this article the main fiscal measures applicable both during and after the state of emergency.

I. With regard to the main concern of traditional gambling operators, regarding the licenses and authorizations for organizing and operating the gambling games, whose validity expires during the state of emergency, art. 14 of the Decree 195/2020 regarding the establishment of the state of emergency on the territory of Romania, generally provides that the validity of the documents issued by the public authorities that expire during the state of emergency is maintained.
The decree does not detail this measure (which is the period of validity of these documents after the state of emergency, if they receive a new period of complete validity at the end of the state of emergency, etc.), and in the absence of such clarification, the validity of the documents in question should be valid be considered extended for the entire duration of the state of emergency.
This last aspect is clarified in the draft GEO regarding some fiscal-budgetary measures, which in the art. VIII provides that the Government Ordinance no. 77/2009 regarding the organization and operation of gambling is completed as follows:

1. In Article 12, after paragraph (1), a new paragraph, paragraph (1’) is inserted, with the following content:
(1’) The licenses for organizing gambling that expire during the state of emergency are extended by 90 days from the date of the cessation of the state of emergency. Operators in the field who wish to continue the activity can make requests for the re-authorization of the activity up to 90 days at the latest, from the date of cessation of the state of emergency.

2. In Article 12, after paragraph (3), a new paragraph, paragraph (3’) is inserted, with the following content:
(3’) Authorizations for the operation of games of chance that expire during the state of emergency shall be extended by 90 days from the date of cessation of the state of emergency. Operators in the field who wish to continue the activity can make requests for the re-authorization of the activity up to 90 days at the latest, from the date of cessation of the state of emergency.

Thus, if the project were approved in the form presented, the following aspects would be clarified:
– Licenses and authorizations for the organization and operation of games of chance that expire during the state of emergency remain valid for the entire period of the state of emergency (aspect that also emerged from the interpretation of Article 14 of Decree No. 195/2020 on the establishment of the state of emergency).
– Licenses and authorizations for the organization and operation of gambling that expire during the state of emergency extend their validity after the state of emergency, for a maximum of 90 days, during which operators wishing to resume the activity may apply for re-authorization.

In other words, regarding the payment obligations related to the authorizations for the exploitation of traditional gambling, the same Draft provides in point 3 of art. VIII, the fact that, in Article 14 of GEO 77/2009 on the organization and operation of gambling, after paragraph (5), three new paragraphs, paragraphs (6) to (8), are inserted, which will have the following content:

(6) During the state of emergency, payment obligations related to traditional gambling operating authorizations shall be suspended.
(7) For the activities mentioned in par. (6), the sanctions provided for in this emergency ordinance regarding the non-payment of the fees related to the gambling authorizations, if the payment of the fees falling under the provisions of para. (6) shall be carried out no later than 30 working days after the cessation of the state of emergency.
(8) Operators that fall under par. (6) does not owe taxes related to the gambling authorizations during the entire period of the emergency.

We appreciate that the proposal is auspicious, bringing important clarifications regarding the organizers of traditional gambling, meant to remove from the uncertainties that hover over the obligations incumbent on them or not during the suspension of activity.

II. Regarding the tax obligations related to the unemployment benefit, as I have explained in a previous article, it is subject, according to art. XI paragraph (4) of Ordinance no. 30/2020, taxation and payment of compulsory social contributions.

The calculation, withholding and payment of income tax, state social insurance contribution and health insurance contribution is performed by the employer from the benefits received from the unemployment insurance budget.
The term of payment and declaration of the fiscal obligations provided above is the date of 25 inclusive, of the month following the one in which the payment is made from the unemployment insurance budget.
From the interpretation of the new legal provisions, it results, at least from our point of view, that these contributions will not be borne by the employer from his own funds, to be calculated, withheld and paid by him after obtaining from the unemployment insurance budget of allowances.

Thus, the Declarations for contributions and taxes are completed according to the rules by the Fiscal Code and the Fiscal Procedure Code, but the term for declaring and effective payment of contributions and tax is postponed until the 25th of the following month from the time when employers receive unemployment benefits. Technically from the state, with the obligation of employers to pay taxes and contributions with priority from the state-subsidized allowance. Also, no insurance contribution for work is due for benefits.

We mention that, also in this case, there is a Bill under debate which proposes to postpone the payment of social security contributions related to this allowance for a period of 3 months with the recovery of these debts in the next 12 months after the cessation of the measure. It remains to be seen, in the period to come, what will be the decision of the legislature in this regard.

III. Another provision that interests the economic operators and equally the organizers of gambling can be found in the content of art. 1 of the Ordinance no. 33/2020 regarding some fiscal measures and the modification of some normative acts.
Thus, in order to support the economic activity but also to increase the degree of collection of the budgetary debts during the state of emergency, the Ordinance stipulates for the benefit of the tax payers the profit tax that pays the tax due for the first quarter of the year 2020, respectively for the advance payment related to the same quarter, up to the deadline of April 25, 2020 inclusive, a calculated discount on the income tax due, in the amount of:
– 5% for large taxpayers;
– 10% for medium taxpayers;
– 10% for other taxpayers who do not fall into any of the above categories.
In this case, the profit tax is determined by subtracting from the tax due the allowance calculated according to those indicated above.
Profit tax payers will be required to file separately in the annual income tax return the allowance calculated under the ordinance.
We also specify that the measure only applies to the tax for the first quarter of 2020 – due on April 25, 2020.

IV. In the content of Ordinance no. 29 of 18 March 2020 on some economic and fiscal-budgetary measures provide for measures that we believe should also be pointed out, namely:
– For the due fiscal obligations starting with March 18, no interest and delay penalties are calculated and not due according to the Fiscal Procedure Code.
Although for the non-payment of these debts penalties are not levied and the forced executions are not started / suspended, the measure does not represent a postponement of the deadline for filing declarations or a postponement of the actual payment of taxes and taxes and does not exempt the taxpayers from the obligation to submit within the relevant tax returns.
For failure to file declarations in due time, the penalties for non-declaration in accordance with the tax legislation are still charged.
– The tax obligations mentioned above are not considered as outstanding tax liabilities.
– The measures of forced execution by committing the budgetary receivables are suspended or not started, except for the forced executions that are applied for the recovery of the budgetary claims established by judicial decisions pronounced in criminal matters. The measures to suspend the forced execution by default on the following amounts representing income and money availability are applied, through the effect of the law, by the credit institutions or third parties, without other formalities from the tax authorities.
– The fiscal measures provided for above cease within 30 days of the cessation of the state of emergency.

In conclusion, regarding the fiscal measures applicable during the state of emergency to gambling operators, we note that the regulations in this regard are not precise, which should take into account the specific activity of organizing and operating the gambling, being regulated in a general way, as wide as possible, by referring most often to a wide range of economic operators.