Romania does not fare well as far as collected VAT is concerned. According to Daniel Anghel, head of indirect rates and taxes at PwC Romania, the state budget fails to get about 38 percent VAT.
” As regards the value added tax receipts, we are not very well. We are in a downward trend. It also has a negative record and, unfortunately, we are on the last place in terms of collecting VAT at the state budget, that famous VAT gap that, theoretically, we could get into the budget,” Anghel said.
He noted that this gap is a combined result of fraud, errors, tax planning, bankruptcy, insolvency, and VAT exemptions.
“The split VAT is the Government’s proposition to collect about 6 billion lei of what is being declared and not paid or paid late. Theoretically, what lies at the origin of the split VAT is the idea of reducing tax evasion, at least theoretically. In practice, this system could identify tax evasion only to the extent that ANAF (National Agency for Fiscal Administration) has an automated and efficient risk analysis to know in real time the taxpayer’s tax evasion profile,” said Anghel.
Government Mihai Tudose has passed legislation to set up the split VAT system, which will be applied as of October 1, 2017 and become mandatory as of January 1, 2018.
PwC also shows in a press release that this new system could generate major cash flow difficulties for companies, generating additional costs and requirements for taxpayers related to the adjustment of their IT systems and accounting applications, payment management and changes in internal operating procedures.
“According to a PwC study at the request of the European Commission regarding the feasibility of implementing such a system, the business environment would take longer to prepare for switching to the new way of VAT, the estimates being between 2 and 4 nor for an optimal transition that will not cause difficulties to the companies, ” Daniel Anghel also said.
Switching to the split payment, one of the biggest VAT changes in recent years, implies that the private sector needs to be prepared in the last three months of the year, during which the implementation is optional to make the necessary adjustments.
Attending the event, Daniel Florin Anghel, Vice-President of National Agency for Fiscal Administration (ANAF), responsible for the collection area, said that the institution he represents is ready to implement the split VAT payment.
“All the problems that may arise are analyzed and we will certainly cope,” ANAF official pointed out. He also spoke about ANAF’s IT system that needs to be changed, and the training of the institution’s employees that must be improved.