Study: Environmental Fund Administration tax system is unclear, not correlated to economic reality

The identification of all tax contributions to the Environmental Fund Administration (AFM) remains a major problem among companies, although the provisions on these taxes and contributions are in force in 2005, according to an EY Romania survey conducted in June 2019.

The survey aimed to measure the impact of the latest legislative changes on the Romanian business environment, with specific reference to contributions and fees to the Environment Fund and the expectations of taxpayers in relation with authorities.

A percentage of 97 percent of respondents believe that the current legislative framework on contributions to the Environment Fund is not clear and not correlated with economic reality. Asked what are the main challenges they face in fulfilling their legal obligations regarding taxes and contributions to the AFM, the participants mentioned the lacunae legislative framework, but also the relationship with the competent authorities, which does not provide concrete information, and the replies refer also to the articles in the legislation.

Concerning the contribution of RON 2 / kg for the packaging placed on the national market, 54 percent of the respondents mentioned that the determination of the quantities of packaging is done by estimating documents (by calculating the difference between the gross value and the net value based on the MRLs etc.). Only 22 percent calculate this contribution based on verbal weighing processes, which is recommended as one of the safest calculation methods.

Ask if they have the certainty that they have identified all the obligations to AFMs arising from their work, only 51 percent of the respondents answered in the affirmative. At the same time, only 16 percent of the participants believe that, in the case of a fiscal inspection by the Environmental Fund Administration, they will not be required to pay additional amounts.

Also, the EY Romania survey revealed that, in the current context, the automation of the processes for determining fees to the Environment Fund is a necessity. Thus, 82 percent of respondents believe that using an IT application would help them manage their packaging issues more effectively.

The importance of automating these processes was signaled by the fact that determining contributions is a time-consuming and resource-intensive exercise, and identifying the computing database may involve several departments and, at the same time, possessing both technical and legal and fiscal data and information.

“The challenges our customers are told are the same from one year to the next. This study confirms that most companies are not prepared to cope with fiscal control on contributions to the Environment Fund. Frequent changes in legislation are a continuous challenge for the business environment and the identification of possibilities for data flow procedures and automation should be a priority for taxpayers,” said Laura Ciobanu, Manager, Environmental Consultancy, EY Romania.

According to the survey, 31 percent currently use a form of automation in the process of determining, calculating and declaring liabilities. Of these, 52 percent use Excel spreadsheets, 19 percent have an independently developed application dedicated to packing only, and 29 percent use an integrated application in the current management system.