September 12, 2017
One of the most current topics of the moment is the disaggregated payment of value added tax or as it is also called, “split VAT”. This method of VAT collection is optional from 1 October 2017 and becomes mandatory from 1 January 2018. On this subject, the Chamber of Tax Consultants expressed its concern because it involves a number of practical issues.
The CCF considers it appropriate to apply the optional VAT broken down in order to identify at practical level where problems arise, because this normative act will have important implications on IT systems within companies, accounting operational records and settlement relations with banks.
During the optional period of application of broken down VAT, CCF will collect information from companies to identify the problems they face, in order to pass them on to the competent authorities.
In a wide-scale analysis submitted to HotNews, the Chamber of Tax Consultants identifies 13 specific problems involving the application of the VAT breakdown payment, according to the current text of the law.
In the following we list practical problems that do not have a solution until this time, as mentioned by the Chamber of Tax Consultants in the article published on HotNews.
1. The following paragraph shall be added to Article 3 (1): (1) it is provided that any taxable person, whether or not registered for VAT purposes, is obliged to make payment of purchases in the supplier’s VAT account, in Article 3 (1) (a) of Regulation (EEC) No 2081/92. (2) except for taxable natural persons who are not registered for VAT purposes.
Thus, we consider that we should exempt from this obligation and taxable persons not established and not registered for VAT purposes in Romania, because it is impossible to require a non-resident to know that he has this obligation, as long as it is not at least registered in Romania.
On the other hand, it is difficult or impossible for the tax authorities to apply the contraventions of Articles 18 and 19. For example, if a company in Japan buys goods from Romania that it resells in Romania to a company established in Romania, it will receive a VAT invoice from the supplier, but will invoice without VAT, because the beneficiary in Romania is obliged to pay VAT by reverse charge.
The company in Japan is not obliged to register in Romania, carrying out all these operations from its headquarters in Japan, but in principle, according to the ordinance should make the payment of VAT for the purchase of goods from RO to the VAT account of the supplier;
2) Since from 1 January 2017 a special regime has been introduced for small farmers, which is intended to reduce their administrative burdens, they should also be exempted from the obligation to pay into the VAT account of VAT suppliers related to purchases;
3) We propose to provide that optionally any person may pay in the VAT account indicated by the supplier, even if it is not expressly referred to in Article 3 (1). (1). For example, if a natural person buys a car and makes payments through the bank, if he wishes he should be able to make a separate payment in the supplier’s VAT account;
4) Non-resident companies that are registered in Romania should be exempted from the provisions of Article 2 (1), the opening of VAT accounts involving additional administrative costs and burdens that could lead them to choose other countries to carry out economic activity;
5. We propose to abolish the provisions relating to assignments of debt in Article 15 (1) (a) and (b) of Regulation (EEC) No 2081/92. (4). The payment by the transferee of VAT from invoices transferred by the transferor to his account is contrary to the provisions of Article 3 (1) (a) of Regulation (EEC) No 2081/92. (1) of the ordinance, since the assignee does not make a purchase of either goods or services when buying a claim.
Also, in the case of the sale of the claim at a price less than the value of VAT on the transferred invoices obliges the assignor to transfer from the current account to the VAT account the difference between the amount paid by the assignor and the value of VAT from the invoices. These amounts will then stay locked in the VAT account, especially in cases where the assignor has already made payment to the state budget for VAT from the transferred invoices, it is necessary to request the ANAF’s consent to transfer the amount to the current account again;
6) It is necessary that by order of the president of ANAF be provided for other amounts with which to debit the VAT account, which are not currently provided for by Article 9 of the ordinance, in the following situations:
-payments on behalf of the customer and receipts on behalf of the customer that are frequent. For example, Company A makes an invoice of 119 lei to Firm B, but the invoice is paid by Firm C. The latter does not make any purchases, but pays an invoice containing VAT. Firm C will recover the entire amount of 119 lei from Firm B, without having to make the invoice, being only a settlement.Firm B has the right to deduct from Company A’s bill, even if it has not paid it. In this case the amounts do not pass through VAT accounts, but the direct consequence is that Company B will have to recover from the VAT account the amount related to this purchase for which it indirectly made the payment, only with the agreement of ANAF;
– cashing in by courier companies or other economic operators of the value of the invoices issued, or payment of VAT due in customs through customs commissions. In the case of importers the payment of VAT to the customs commissioner is not regulated to be made through the VAT account, therefore it is made from the current account.
Subsequently, the imported goods are sold on the territory of Romania with VAT that is collected in the VAT account. Importers remain in the VAT account with the surplus representing the VAT paid to the customs commissioner and should ask ANAF’s consent to transfer the amount to the current account, a situation that will create bottlenecks.
7) Article 9 (1) (a) (.b) provides that the VAT paid to the state budget is debited to the State budget, but it is not provided that the payment of VAT due to the budget can also be made from the current account, although there is no penalty if this payment would be made from the current account;
8) In Article 15 (1) (a) (.b) it is stipulated that the taxable person must transfer to the VAT account the amounts which have not been paid into this account by beneficiaries other than those of Article 3 (1). But if a beneficiary of those referred to in Article 3 (1) (a) is not entitled to the benefit of the Member State concerned, the competent authority of the Member State in which the application is (1) pays incorrectly in another VAT account, there is no provision that allows the person who has collected to transfer to the VAT account the amount related to VAT, to notify the beneficiary and he is no longer sanctioned.
We consider it appropriate to amend this, it is difficult that the payments once made, the beneficiary is obliged to correct the payment, this correction is not possible without the consent of the person who cashed the amount;
9. In Article 23(a) for taxpayers who have a tax year other than the calendar year, provision should be made for the facility for a 5% reduction in corporation tax to be granted for the last quarter of 2017. It is not clear how this provision will apply to taxpayers who are paying quarterly corporation tax, i.e. those who pay corporation tax for the first 3 quarters and then final tax, or to those who pay annual corporation tax.
10) According to Articles 5 and 6 the VAT account must contain in the IBAN the VAT string, there is no express provision that these accounts can only be opened in Romania. Since there are provisions that require that the amounts in VAT accounts be made income to the state budget, if the state has the status of creditor, when the existence of the taxable person ceases, this provision could be applied only to accounts opened in Romania.
11) We consider that the 7 working days for transferring from the current account to the VAT account (for cash, card or individuals regardless of the payment method) is very short and generates a disproportionate administrative burden for continuous tracking of amounts, making periodic calculations and payments, because it will end up that daily to have to make transfers to the VAT account.In addition to retail stores, all companies that provide utilities to individuals and all those that provide services to the population will be affected. We propose, in order to avoid these shortcomings, to set no more than two deadlines per month for these transfers.
12) The ordinance provides that after 1 January 2018, for payments made by payment instruments, credit institutions must provide a mechanism to verify that these payments are made only in VAT accounts. Since there are many payment instruments, including bank cards being payment instruments, we consider that it would be necessary to list those that are covered by this provision.
13) As a general observation, this ordinance will also affect non-VAT payers, who have the status of taxable person, being obliged to pay VAT in the VAT accounts of suppliers. Non-VAT payers (e.g. hospitals, schools, kindergartens, nurseries, small enterprises) not familiar with VAT legislation, will have difficulty complying, especially with partial payments,
when they have to determine how much of the payment represents VAT and transfer to the dedicated account of the supplier. Consequently, we propose that the ordinance be limited to payments between VAT payers, i.e. only between VAT accounts, without obliging to transfer the amounts collected from non-VAT payers to the VAT account.
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