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FIC public statement regarding split VAT

FIC believes that the recently adopted mandatory split VAT system will have significant negative impact on businesses in Romania, be they large or small. This measure will lead to major operational obstacles for all parties involved: the companies which will bear the burden of implementing this new system, the Treasury which will face an avalanche of requests for VAT accounts and ANAF which will have to approve a great number of transfer from VAT accounts as quickly as possible. FIC believes that before implementing this policy the Government should have consulted with the European Commission and, at the same time, run an impact assessment to understand the effects this will have on fiscal evasion and to estimate the implementation cost for the business environment. Poland, for example, took two years to introduce an optional split VAT system while actual implementation was postponed until 2018 following the request of the business environment.

Alternatively we believe it would have been wise to start with a pilot project focusing on a few key areas that have a high degree of fiscal evasion or big delays in paying VAT to the state budget. The system should have been extended to the entire economy only after it had proved its effectiveness. In order to combat tax evasion the authorities should quickly implement measures which have proved their efficacy in other EU members states like the Standard Audit File for taxes, mandatory certified software for invoicing or a centralized VAT database. Burdening good taxpayers with administrative and bureaucratic procedures is not a proper long term strategy for combating tax evasion.