ECONOMY FINANCE&BANKING

Fiscal measures announced by new Government, analysed by EY Romania reps. Milcev: Turnover tax to generate winners and losers

Turnover tax will generate winners and losers, but damages will exceed gains, stated on Thursday Partner and Leader of Tax and Legal practice of EY Romania Alex Milcev.

“The Government has announced its intention to replace the tax on profit with the turnover tax. The reason hasn’t been clearly explained. Supposedly, it would be about the need to streamline the fiscal system. The tax on profit has been a cost (for SMEs – ed.n.) in order to do business in the last 27 years. Thus, the need for a fiscal consultant’s intervention disappears. There is an underlying question here: is such a tax appropriate? Doesn’t streamlining come at a cost? This tax is not appropriate and it will generate both winners and losers. In our opinion, the damages will exceed the gains,” said Milcev in a press conference.

According to him, there are many businesses that make good money and are profitable due to high turnover.

“This is not a tax we can reasonably accept. A lot of tensions will ensue in the system,” the EY official further said.

In his turn, Tax Executive Director Andra Casu showed that such a measure cannot get through the European Commission, because it resembles very much the VAT.

“Such a situation would prevent the enforcement of European directives. This project isn’t meant to succeed. It has no chances to go through,” Andra Casu underscored.

 

ANAF collects 75-78 lei for every 100 lei returned

 

For every 100 lei returned, the National Agency for Fiscal Administration (ANAF) collects between 75 and 78 lei, Bulgarians being far above us, with one of the most efficient collecting system in the European Union (EU), Partner and Leader of Tax and Legal practice of EY Romania Alex Milcev also stated on Thursday.

“Let’s say the corporate income tax, excises, VAT, payroll tax of 100 lei return to the ANAF. They collect 75-78 lei. I believe that it never exceeded 80 lei. Over 20 percent of the money returned are not being collected, leaving aside tax evasion of 20 – 50 percent. We are talking about the money that’s on the table. Clearly, there are shell companies that have gone bankrupt in the meantime. Bulgarians are better at this chapter. They have a successful project for updating their fiscal administration. The collection rate has increased. They have one of the best collecting systems in the EU. The Scandinavian countries are somewhere at 97 – 99 percent collection rate, therefore we have plus 70, they have minus 100,” Milcev stated.

However, he underscores that the fiscal system of Romania “is not bad.”

“I don’t believe we have a bad fiscal system. It really isn’t complicated, despite discussions about hundreds of fees that strangle the taxpayer and so on. You haven’t seen what is happening in other countries. We really don’t have a sophisticated system, there are not a lot of exceptions and it’s not complicated, it really is relatively stable, at least over the past 10 years since we joined the EU. It is more stable than before. The corporate income tax changes even twice a year. I don’t think we have to tamper the system and make other rules. The existing rules need to be reinforced. That’s how it is all over the world, ” the EY official said.

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