STANDARD SUMMARY PROJECT FICHE

1. Basic Information

1.1 Programme: Transition Facility - 2007/19343.05.03 - Strengthening the tax administration reform

1.2 Twinning Light (TL) Number: RO /2007-IB/FI /01/TL1.3 Title: Improving the legislation on direct taxation 1.4 Sector: Public Finance1.5 Beneficiary country: Romania – Ministry of Economy and Finance

2. Objectives

2.1Overall Objective(s): The administrative capacity of the Ministry of Economy and Finance increased related to tax legislation appliance in order to ensure it’s functioning at the level of European Union standards and best practices

2.2Project purpose: Improving the implementation of the 434/1990 Directive’s provisions regarding a mutual tax system for mergers, divisions, partial divisions, transfer of shares, exchange of shares, between different Member States’ companies

2.3Contribution to National Development Plan/Cooperation agreement/Association Agreement/Action Plan

Not applicable.

3 Description

3.1Background and justification:

The September 2006 Comprehensive Monitoring Report emphasized that Romania has to continue to adopt the legal amendments in order to complete the transposition of direct taxation legislation.The accession process of Romania to the EU on 1st January 2007 supposed the ability of the Ministry of public Finance (the actual Ministry of Economy and Finance) to assume some concrete commitments regarding the transposition and implementation of the acquis communautaire.Thus, Romania committed itself to transpose until 31.12.2006 the Directive 434/1990/EC, regarding the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States. The transposition was achieved through the Law no. 343/2006 regarding the Fiscal Code published in the Official Journal nr. 662/ 1 August 2006 and entered into force on 1 January 2007.

After the elaboration of the relevant legislation for harmonizing the above mentioned Directive, the MEF (previous MoPF) realized that is confronted with difficulties both on the correct transposition of the Directive, which have takes into account also the cases discussed at the European Court of Justice, and in its implementation regarding a lot of questions from the taxpayers which have to apply it.

This situation requires the knowing in deepens the cases discussed at the European Court of Justice and the elaboration of some guides, which will help the taxpayers to understand how the directive must be applied.

Thus, the project is based on the need to ensure the appropriate enforcement of the above-mentioned Directive in the new context of Romania’s Membership.

No overlap exists with Structural and Cohesion Funding.

3.2Linked activities:

No previous assistance was focused on aspect related to the transposition/enforcement of the Directive 434/1990/EC.

3.3Results:

1. Methodology for the appropriate enforcement of the legal provisions in the field covered by the Directive 434/1990/EC, elaborated;

2. Case studies and guidelines for enforcing the law for each type of economical operation made between different Member States’ companies, regarding the Directive 434/1990/EC (including case studies from the European Court of Justice);

3. The personnel within the Directorate of Legislation for Direct Taxation and Directorate of Methodology and Procedures for Fiscal Inspection, as well as from the territorial level, trained on applying the methodology for enforcing the provisions of the Directive 434/1990/EC.

3.4Activities:

It is proposed that assistance will be implemented through a Twinning ‘light’ arrangement:

Analyzing the current situation related to the implementation of the 434/1990 Directive’s provisions regarding a mutual tax system for mergers, divisions, partial divisions, transfer of shares, exchange of shares, between different Member States’ companies (2 missions of 5 days, involving 2 experts);

Organizing workshops for elaborating the methodology regarding the enforcement of the Directive 434/1990/EC (2 missions of 5 days, involving 2 experts);

2.1 Making working groups for case studies and elaborating specific guidelines for economical operations under the Directive 434/1990/EC (3 missions of 5 days, involving 2 experts);

2.2 Organizing workshops for analyzing representative case studies of the European Court of Justice and elaborating a guide containing the most representatives cases of ECJ (4 missions of 5 days, involving 2 experts);

3. Preparing training materials and organizing seminars for training the staff (50 persons per session, 2 sessions of 5 days each) in applying the enforcement methodology of the Directive 434/1990/EC; Evaluation of the knowledge acquired; evaluation of the training by the participants (1 missions of 5 days, involving 2 experts for training materials preparation and 2 seminars of 5 days for training delivered by 2 experts).

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3.5 Means/Input from the MS Partner Administration

In accordance with the Twinning Manual, the presence of a RTA is not provided for a twinning light project. In this case, one of the experts involved will have a project coordinator role. This expert must have experience as Project Manager in at least one project.

The main tasks for the Project Manager are:- Analyzing the current situation related to the implementation of the 434/1990

Directive’s provisions regarding a mutual tax system for mergers, divisions, partial divisions, transfer of shares, exchange of shares, between different Member States’ companies;

- Participating to the elaboration of the methodology regarding the enforcement of the Directive 434/1990/EC;

- Elaborating specific guidelines for economical operations under the Directive 434/1990/EC;

- Project management and coordination of the activities of the team members in line with the agreed work programmes to enable timely completion of project outputs;

- Preparation of project progress reports and supervision of the preparation and production of tasks reports.

Project Manager profile:1. Minimum 10 years of activity in fiscal administration2. Minimum 8 years of activity in the field of direct taxation 3. Wide knowledge of related legislation4. Participation in similar projects 5. Working experience in development of projects in the area of legislation on

direct taxation 6. University degree in economic and/or juridical field.7. Excellent computer skills (Word, Excel)8. Fluency in spoken and written English and/or French; knowledge of the

Romanian language will be an advantage.

A team of minimum 3 experts (minimum 140 man-days in total) is required for the project implementation and they should be able to perform all the activities indicated at section 3.4 Activities.

Expert 1 profile (involved in all the project activities):9. Minimum 10 years of activity in the field of direct taxation 10.Wide knowledge of related legislation11.Participation in similar projects 12.University degree in economic and/or juridical field.13.Excellent computer skills (Word, Excel)14.Fluency in spoken and written English and/or French; knowledge of the

Romanian language will be an advantage.

Expert 2 profile (involved in the activity 2.2):15.Minimum 15 years of activity in the field of taxation 16.Knowledge of representative cases of the European Court of Justice17.Participation in similar projects 18.University degree in economic and/or juridical field.19.Excellent computer skills (Word, Excel)

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20.Fluency in spoken and written English and/or French; knowledge of the Romanian language will be an advantage.

Experts 3 profile (involved in the activity 3):21.Minimum 5 years of activity in fiscal administration22.Participation in similar projects 23.Knowledge of training strategies24.Experience in organizing similar training courses25.University degree in economic and/or juridical field.26.Excellent computer skills (Word, Excel)27.Fluency in spoken and written English and/or French; knowledge of the

Romanian language will be an advantage.

Working language

The working language of the project will be English and/or French.

4. Institutional Framework

The project will be implemented within the following directorate from Ministry of Economy and Finance (Address: Str. Apolodor, no. 17, sector 5, Bucharest):

General Directorate of Direct Tax LegislationContact: Mrs. Cornelia Petreanu – General DirectorPhone: (+4021) 319 97 59 / ext. 1024E-mail: cornelia.petreanu@mfinante.ro

5. Detailed Budget MEuro

Transition Facility SupportInvestmentSupport

Institution Building

Total TF(=I+IB)

National Cofinancing*

IFI TOTAL

Contract 1 - 0.25 - - - 0.25

Total - 0.25 - - -0.25

* Contributions from the Romanian administration for effective implementation of the twinning light will be further detailed in the twinning light contract.To ensure smooth implementation of the project, the beneficiary will provide adequately equipped office space with telephone, PC (Internet) and fax. Photocopier and access to the necessary information as well as secretarial support will be ensured during the project life-time. In addition the beneficiary will provide space and facilities for workshops (training), consultations and seminars. The national co-financing will be specified in the twinning contract and will be a parallel co-financing.

VAT is not an eligible expenditure under both the Transition Facility and national cofinancing funds indicated in the above budget table. Where contracts are subject to VAT due to provisions of national legislation, these funds have to be provided from national resource outside and in addition to the amounts indicated in the budget table.

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6. Implementation Arrangements

6.1 Implementing Agency

The Central Finance and Contracts Unit (CFCU) will be the Implementing Agency and as such be responsible for all procedural aspects of the tendering process, contracting matters and financial management (including payments) of the project activities.

Contact: Central Finance and Contracts Unit (CFCU)Director (PAO): Mrs. Carmen RosuPhone: 00 4021 326 8703Fax: 00 4021 326 8730E-mail: carmen.rosu@mfinante.roAddress: 44 Mircea-Voda Boulevard, Sector 3, Bucharest

6.2 Implementing Authority

The Ministry of Economy and Finance will be the Implementing Authority.The General Directorate of Direct Tax Legislation is the beneficiary of this twinning light project and is in charge of the project coordination with the Member State involved in the project and is responsible for the Romanian contributions to the activities required.

Project LeaderMrs. Cornelia Petreanu – General Director, General Directorate of Direct Tax LegislationPhone: (+4021) 319 97 59 / ext. 1024E-mail: cornelia.petreanu@mfinante.ro

The General Directorate ECOFIN and Community Assistance (Programme Implementation Unit) will be responsible for monitoring the technical implementation.

Contact:General Directorate ECOFIN and Community Assistance (PIU)Mrs. Lenuta Stefanescu – Deputy General Director (Head of PIU)Phone: 00 4021 319 98 58Fax: 00 4021 319 98 58E-mail: lenuta.stefanescu@mfinante.roAddress: 17 Apolodor Street, Sector 5, Bucharest

A Project Steering Committee will be established. It will consist of representatives from the Project beneficiary, the Member State Partner and the CFCU.

The Steering Committee will be chaired by the representative of the Project beneficiary and the Member State Partner. The experts involved in the Project implementation should be present at the Project Steering Committee meeting upon invitation. Other relevant parties affected by the project will be invited. The Project Steering Committee will meet on basis of the Chairman’s invitation (the PIU representative will be invited).Its function will be to provide guidance and supervision to the Project throughout its implementation, and to decide on corrective actions whenever needed. The Steering

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Committee will review project progress, verify the achievement of the outputs and mandatory results and discuss actions to be undertaken in the following quarter. The Steering Committee will also make decisions about possible proposals of changes to the timetable, task plans and in the budget-related issues.

There will be a start-up report covering the first two months of the contract (Templates as for Standard Twinning) and at the end of the project a Final Report. They must be endorsed and countersigned by the beneficiary, who may make additional comments.

All reports should be submitted to the Beneficiary, to the CFCU (relevant task manager) and copies of all reports should be submitted to the EC Representation in Romania and to the PIU.

6.3 ContractsOne twinning light project “Improving the legislation on direct taxation”.

7. Implementation Schedule

7.1Launching of the call for proposals: January 20087.2Start of project activity: June 20087.3Project Completion: November 20087.4 Duration of the implementation period: 6 months

8. SustainabilityThe assistance required under this project is meant to contribute to the enhancement of the Romanian administration capacity to implement the acquis communautary with a view to properly functioning in the new context of Romania’s Membership.Also, the Guidelines delivered under the project will be used as supporting material for the future training of the staff.

9. Crosscutting issues

9.1 Equal Opportunity

Equal opportunities of the European Employment Policy will also be implemented under this project – first of all through securing equal access to services. Specific provisions for guaranteeing equal opportunity of access to activities, employment and other benefits resulting from the project implementation will be developed. Gender related indicators would be gathered and monitored throughout the project implementation to ensure that corrective steps can be taken at an appropriate moment in the project cycle, and will be included in the project impact assessment guidelines. The project will ensure an equal gender representation related to the necessary competencies and abilities in developing the actions programmed within the project. There will be ensured a fair selection of all participants in all project fields. All personnel selection activities are to be developed under the European non-discriminatory principles.

9. 2 Environment

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N/A

10. Conditionality and sequencingDue to the specificity of the field requiring assistance, it’s very important to have specialists in the public sector, which have the necessary experience in the field and are able to offer their support to the strengthening of the Romanian administration administrative capacity and to bring it at international standards and the EU best practices in this field.

ANNEXES TO PROJECT FICHE

1. Logical framework matrix in standard format 2. Detailed implementation chart 3. Contracting and disbursement schedule by quarter for full duration of program

(including disbursement period) 4. Detailed budgetary estimation5. List of relevant Laws and Regulations

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Annex 1Log frame

Transition Facility programme for Romania

LOGFRAME PLANNING MATRIX FOR Project Fiche

Strengthening the tax administration reform

Programme name and number

Transition Facility Improving the legislation on direct taxation Contracting period expires: 15.12.2009 Disbursement period

expires: 15.12.2010

Total budget: 0.25 Euro TF budget: 0,25 EuroOverall objective Relates to Copenhagen

criterion and acquis chapter1 List of other projects with same objective

The administrative capacity of the Ministry of Economy and Finance increased related to tax legislation appliance in order to ensure it’s functioning at the level of European Union standards and best practices

Economic Copenhagen Criterion “the existence of a functioning market economy”

2006 Comprehensive Monitoring Report (page 27)

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Project purpose Objectively verifiable indicators

Sources of Verification Assumptions

Improving the implementation of the 434/1990 Directive’s provisions regarding a

Low number of questions from the taxpayers

Reduced period for

Correspondence bookStatistical reportsMethodological Norms;Activity reports;

Appropriate appliance of legal acts

1 Please specify here the recommendation made in Comprehensive Monitoring Report or other relevant documents (SIGMA (financial control, procurement, Peer Reviews, Evaluation reports, Final reports of TW projects)

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mutual tax system for mergers, divisions, partial divisions, transfer of shares, exchange of shares, between different Member States’ companies

answering to the taxpayers questions

Final report, including the text of all individual tasks;The MEF’s site

Results Objectively verifiable indicators

Sources of Verification Assumptions

1. Methodology for the appropriate enforcement of the legal provisions in the field covered by the Directive 434/1990/EC, elaborated;2. Case studies and guidelines for enforcing the law for each type of economical operation made between different Member States’ companies, regarding the Directive 434/1990/EC (including case studies from the European Court of Justice);3. The personnel within the Directorate of Legislation for Direct Taxation and Directorate of

The methodology approved by the MEF;

A minimum one guide elaborated and approved;

A minimum of 25 trained persons.

Methodological Norms; Activity reports; Final report, including the text of all individual tasks; The MEF’s site.

Relevant experience of the twinning partners;

Availability of some qualified experts.

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Methodology and Procedures for Fiscal inspection, as well as from the territorial level trained on applying the methodology for enforcing the provisions of the Directive 434/1990/EC.Activities Means Assumptions

1.1Analyzing the current situation related to the implementation of the 434/1990 Directive’s provisions regarding a mutual tax system for mergers, divisions, partial divisions, transfer of shares, exchange of shares, between different Member States’ companies (2 missions of 5 days, involving 2 experts);1.2Organizing workshops for elaborating the methodology regarding the enforcement of the Directive 434/1990/EC (2 missions of 5 days,

Twinning light Relevant experience of the twinning partners;

Availability of qualified experts;

Human and financial resources.

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involving 2 experts);2.1 Making working groups for case studies and elaborating specific guidelines for economical operations under the Directive 434/1990/EC (3 missions of 5 days, involving 2 experts);2.2 Organizing workshops for analyzing representative case studies of the European Court of Justice and elaborating a guide containing the most representatives cases of ECJ (4 missions of 5 days, involving 2 experts);3. Preparing training materials and organizing seminars for training the staff (50 persons per session, 2 sessions of 5 days each) in applying the enforcement methodology of the Directive 434/1990/EC; Evaluation of the knowledge acquired;

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evaluation of the training by the participants (1 missions of 5 days, involving 2 experts for training materials preparation and 2 seminars of 5 days for training delivered by 2 experts).

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Annex 2

DETAILED TIME IMPLEMENTATION CHART FOR PROJECT

Improving the legislation on direct taxation

2007 2008 2009

calendar months J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N DImproving the legislation on direct taxation D D D D D D D D D D D D C C C C C I I I I I I

Twinning Light Contract - 6 months

D = Design C = ContractingI = Implementation

Annex 3

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IMPROVING THE LEGISLATION ON DIRECT TAXATION

Annex 3b - Cumulative disbursement schedule

31/03/08

30/06/08

30/09/08

31/12/08

31/03/09

30/06/09

30/09/09

31/12/09

31/03/010

30/06/010

30/06/010

30/09/010

DISBURSEMENT Twinning light 0.20 0.20 0.25

NB: All disbursements must be completed within 36 months of signature of the FA.

Annex 3a - Cumulative contracting schedule

31/03/07

30/06/07

30/09/07

31/12/07

31/03/08

30/06/08

30/09/08

31/12/08

31/03/09

30/06/09

30/09/09

31/12/09

CONTRACTED Twinning light 0.25

NB: All contracting should normally be completed within 6-12 months and must be completed within 24 months of signature of the FA.

Annex 4

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Budget breakdown for the twinning light project - “Improving the legislation on direct taxation” (Estimated budget 250,000 Euro)

Current number

Amount (Euro)

Member State BCI. Project coordination costs (including translation/interpretation, printing

materials)57,034

II. Project activities 187,966

Activities 1.1 – 1.2 - 40 man-days in totalActivity 1.1 - Fees: 20 m/d X 350; PMC: 7000 x 1,5; Travel: 4 X 700; Per diem: 4x 7 x 228)Activity 1.2 - Fees: 20 m/d X 350; PMC: 7000 x 1,5; Travel: 4 X 700; Per diem: 4x 7 x 228)

53,296

Activities 2.1 – 2.2 - 70 man-days in totalActivity 2.1 - Fees: 30 m/d X 350; PMC: 10500 x 1,5; Travel: 6 X 700; Per diem: 6 x 7 x 228)Activity 2.2 - Fees: 20 m/d X 350; 20 m/d X 450; PMC: 16000 x 1,5; Travel: 8 X 700; Per diem: 8 x 7 x 228)

98,394

Activities 3 – 30 man-days in total - Fees: 15 m/d X 250; 15 m/d X 350; PMC: 9000 x 1,5; Travel: 6 X 700; Per diem: 6 x 7 x 228

36,276

III. Reserves 5,000

TOTAL 250,000

Annex 5

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REFERENCE LIST OF RELEVANT LAWS AND REGULATIONS

1. Government Ordinance no. 92/2003 regarding the Fiscal Procedure Code, republished, with subsequent modifications and completions, into O.J. no. 863/ 26.09.2005;

2. Law no. 505/2006 approving Government Ordinance no. 35/2006 for the modification and completion of Government Ordinance no. 92/2003 regarding the Fiscal Procedure Code, published into O.J. no. 1054/ 30.12.2006;

3. Government Decision no. 1050/2004 approving Methodological Standards for the application of Government Ordinance no. 92/2003 regarding the Fiscal Procedure Code, O.J. no. 651/20.07.2004;

4. Law no. 297 / 2004 regarding the capital market, published into O.J. no. 571/ 29.06.2004;

5. Government Ordinance no. 79/2003 regarding control and recovery of Community funds, as well as co-financing funds relevant used improperly, with subsequent modifications and completions, O.J. no. 622/30.08.2003 ;

6. Government Ordinance no. 117/2006 regarding national procedures in the area of state aide, published into O.J. no. 1042/ 28.12.2006;

7. Law no. 343/ 2006 for modification and completion of Law no. 571/2003 regarding the Fiscal Code, published into O.J. no. 662/ 01.08.2006.

8. Government Decision no. 1861/2006 regarding the amendment and completion of the Methodological Norms for enforcement of the Law no. 571/2003 on Fiscal Code, approved by Government Decision no. 44/2004.

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