Government drops VAT on intra-community acquisitions and luxury goods excise

The government has decided to ditch its decision to apply VAT to acquisitions within the European community. The executive also reversed the move to apply excise taxes to luxury products. These measures were taken after the European Commission warned that the decisions were against EU legislation.

The European Commission told Mediafax newswire two weeks ago that the ordinance on combating tax evasion “raises a series of concerns regarding its conformity with the EU legislation.” The Commission said it had been consulted very late by the Romanian authorities and that the government had not taken into account the observations it had received from the European Commission. During a session on Wednesday, the government re-discussed the emergency ordinance on the prevention of tax evasion, which was approved at the end of May but was not published in the Official Registry. Following the session, the executive adopted a new form of the ordinance which eliminates the stipulations criticized by the European Commission, according to official sources, quoted by Mediafax.

The initial document, which was approved on May 30, stipulated that acquisitions within the community of cereals, vegetables, fruit, fish, sugar and construction materials would attract VAT.

Also, the document stipulated what excise taxes would be applied to which categories of luxury products.

The government wanted to apply excise taxes to:

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• clothes from natural fur (except rabbit, sheep, goat)- 45 percent
• crystal items-15 percent
• gold and platinum jewelry(except é wedding rings)- 10 percent
• perfumery products- 10- 35 percent
• weapons (other than those for military use)- 100 percent
• leisure yachts and boats- 5-15 percent
• engines with more than 25 horse power for leisure yachts and ships- 5-9 percent