The plenary session of the Chamber of Deputies has passed the government emergency ordinance 23/2017 on split VAT, by 163 votes to 95. The law is to be sent at President Klaus Iohannis for promulgation.
The opposition parties, PNL, USR and PMP have voted against.
“Ordinance 23 represents a unique experiment in Europe, for other countries are still applying split VAT either optionally or in the state companies exclusively. The infernal red tape triggered by the split VAT will negatively impact Romania’s economy,” said USR deputy Claudiu Nasui.
In his turn, Liberal deputy Bogdan Hutuca argued that the measure has only two main causes: “one is the government’s inability to manage the VAT and the second is the failure of the fiscal policies in Romania and the desperate need of resources, without considering the consequences.”
The GEO had been given the green light of the budget committee in the lower chamber on Tuesday, with the deputies passing several amendments. The most important amendment is that the provision to enforce the split VAT is compulsory only for the companies that have VAT debts or are insolvent. Another change says that the limits of the debts from which the companies enter this system are increased ten times.
The Senate also passed the draft law on split VAT at the end of October: the version adopted in the upper chamber also said the split VAT will be optional for all economic operators, except for those in insolvency procedures or those not fulfilling the tax obligations regarding the VAT for a longer interval.
According to the provisions passed by the Senate, companies are compelled to open and use at least one VAT account if they meet at least one of the following criteria: they are behind with VAT fiscal obligations on December 31, 2017, they report residual VAT obligations older than 30 days since the date of payment starting January 1, 2018 or if they are under the national legislation incidence on insolvency procedures.
At the same time, those who voluntarily opt for the split VAT can give up this mechanism at the end of the fiscal year, but not earlier than one year since the date when the measure has been applied.
The companies that have delays in VAT payment or that were insolvent can give up the split VAT in six months after they are not in this situation anymore.
The companies that voluntarily choose the split VAT benefit of two facilities. They will enjoy a 5% cutback to the payment of the corporate income tax for the fourth quarter of the 2017 fiscal year. Secondly, these companies will have their VAT delay penalties annulled overdue on September 30, 2017.