PwC Romania: Introduction of new VAT split payment system will have major impact on companies

Georgeta Gheorghe 08/08/2017 | 18:55

Romania could become the only EU member state to enforce the VAT split payment, and this will have major impact on Romanian companies, a study by PwC Romania shows. 

The split payment implies the use of a bank account dedicated to VAT receipts and payments.

According to the draft ordinance, the system will be introduced on a voluntary basis on 1 September 2017 and will become compulsory in October 2017.

After the new system is implemented, once a delivery/ service is performed, the suppliers will provide the client with a VAT account (opened at treasury units or lenders). The latter will then pay the VAT equivalent to the provider’s account. Each receipt will consist of two sections, one for the VAT and one for the taxable base.

The amounts received in the VAT account can be used by tax payers only to pay the VAT owed to their suppliers or towards the state budget at the deadlines set by the law. For cash payments, by card or via other alternatives, the taxpayer will have to pay to his or her own VAT account the VAT amounts within three days. The amounts from the VAT account can be transferred to the current account of the owner only with the approval of the National Agency for Fiscal Administration (ANAF).

“PwC Romania supports the need to implement measures to increase the VAT collection rate to the state budget and to combat tax evasion, but such measures must always be proportionate to the aim pursued and documented through impact studies highlighting the expected benefits of the measures proposed in return for the possible costs of their implementation,” said Mihaela Mitroi, head of fiscal and legal consultancy PwC Romania and South East Europe.

The new VAT split payment system will generate major cash-flow difficulties for companies, additional costs and additional burdens for the taxpayers on adapting IT systems and accounting programs, managing payments, and changing internal workflows. Companies will also incur additional costs with bank charges resulting from the significant increase in bank transactions and possible sanctions for errors or delays in implementation, Pwc Romania warns.

“We would like to caution on the consequences of implementing the system, both at the level of the taxpayers who will have operational difficulties in implementing the system within a very short time, as well as at ANAF level, which will have additional tasks regarding the approval of the transfer requests of amounts from the VAT account into the current account,” added Mitroi.

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