Tax&Law conference: New VAT registration rules make life hard for all companies

Present during the 14th edition of BR’s Tax & Law conference this Monday, Oana Iacob, head of service with the department for VAT legislation within the Ministry of Public Finances talked about the main changes to the VAT legislation coming into force this year. One of the most important changes is the fact that starting January 1, telecommunications, broadcasting and electronic services will have to be taxed in the country where the customer belongs, regardless of whether the customer is a business or consumer, she explained. Other VAT related changes coming into force this year have to do with the determination of the VAT taxable base , the registration or annulment of registration for VAT purposes and cutting the VAT to 9 percent for accommodation services.

However, one of the most debated matters during the event were the changes to the criteria for registration for VAT purposes triggered by several orders of the president of the National Agency of Fiscal Administration (ANAF) (“OPANAF” 17, 19, 18,112/2015). This entails that in order to register for VAT purposes, but also to maintaining existing VAT registration numbers, companies established under Law No. 31/1990 must demonstrate both the intention and the capacity to perform economic activities by submitting form 088.

While the measure is meant to address tax evasion, it also creates difficulties and increases bureaucracy for complying companies, argued participants.

“Someone thought about ways to filter tax evasion and came up with this form. My only suggestion to the president of the ANAF would be to ask those who came up with this to actually set up and register a company for VAT purposes, eventually a company with foreign associates,” said Dragos Doros, the director of the taxation services at KPMG Romania.

Form 088 has to be submitted not only by companies that want to register for VAT purposes but also by companies that undergo ownership changes, said Ioana Hockl, partner with ZRP Tax. “Companies that have more than proved their capacity to perform economic activities find themselves in the situation to have their VAT registration number canceled and they have to undergo this bureaucratic and discretionary process once more. This is not normal. There should be some very clear criteria based on which ANAF accepts or rejects a company’s VAT registration,” she explained.