Tax and Budget Legislation
This domain tests whether a first head understands the company's tax position and the rules on spending public money, because both carry personal liability.
Tax Code basics
The Tax Code (No. 120-VI of 25 December 2017) sets the tax system, obligations and control. Core rates: corporate income tax 20%, VAT 12% (registration threshold 20,000 MCI), individual income tax 10%, social tax 9.5%, plus property, land and transport taxes. Taxable income is revenue minus deductible expenses; deductions require supporting documents and a link to income-generating activity. VAT offset requires a correctly issued electronic invoice.
Compliance duties
Register with the tax authority, file returns within statutory deadlines, keep records for the limitation period, and apply transfer pricing rules to controlled transactions. A tax audit may end with additional assessment, penalties and interest; the first head can be held administratively liable, and evasion becomes criminal.
Budget rules
The Budget Code (No. 95-IV of 4 December 2008) governs the budget system, its principles - unity, completeness, balance, transparency - the budget process and the use of transfers. State audit and financial control follow Law No. 392-V. Misuse of budget funds is not a technicality; it is an administrative or criminal offence.
Worked example
Revenue 100 mln; expenses 80 mln, including 5 mln without supporting documents. Deductible base = 100 − (80 − 5) = 25 mln; CIT = 20% × 25 = 5 mln. The undocumented 5 mln is added back, not merely noted in a memo.
Traps
Confusing social tax with social contributions; deducting fines and undocumented costs; missing electronic invoice deadlines and losing the offset; treating a subsidy as ordinary revenue without checking budget classification.