FIC: VAT split payment will not combat tax evasion

The administrative and bureaucratic burden placed on honest taxpayers via measures such as the VAT split payment is not, in the long run, a good strategy to combat tax evasion, representatives of the Foreign Investors Council (FIC) said in a statement.

The FIC believes that the mandatory introduction of the VAT split payment from 1 January 2018 will have a very serious impact on the business environment, be it small entrepreneurs or large companies. This measure will cause major operational bottlenecks in the work of all parties involved – companies that in the initial phase will have to carry out all the necessary steps to implement the new system, state treasury units, which will be hit by a large number of requests for VAT accounts , as well as ANAF, which will have to approve a significant number of transfer requests from the VAT account in the current account within a shortest possible time frame.

In the opinion of the FIC, it would be necessary to consult the European Commission in advance and to draw up an impact study to highlight the effect on tax evasion and the costs for the business environment. In the case of Poland, the split VAT payment project has been in public debate for 2 years. There, the system is optional and implementation has been postponed until 2018 at the request of the business environment.

An alternative measure would be to implement this scheme only as a pilot project and only in certain sectors of activity involving a high degree of tax evasion or non-compliance with the timely payment of VAT to the state budget, with the possibility of extension if the efficiency of the system is proven. Anti-evasion measures should also be developed and implemented as a matter of urgency for measures that have proved effective in other EU Member States such as the Standard Tax Audit File, the obligation to use certified invoicing software or the maintenance of a centralised VAT monitoring database, council representatives argued.