On Wednesday, the National Liberal Party tabled a package of bills on the fiscal domain, including the abrogation of the Split VAT, the deduction of salary expenditures registered on public holidays, and the extension of the tax waiver for reinvested profit in the case of investments in new means of transportation.
In PNL’s opinion, the Split VAT is a bureaucratic measure proven to lack efficiency in relation to the Government’s stated goal, but also a useless brake for the business sector that honestly carries out its activity.
The split payment of the VAT has risen the bureaucratic costs of economic agents of good faith, against the backdrop in which the overwhelming majority of persons registered as payers of VAT comply with the payments (82.35 percent). After the mandatory implementation of this system – on 1 January 2018 – for certain persons registered as payers of VAT, the situation did not significantly change: the taxable persons automatically enrolled in the system are just as few – around 18,000, of which 12,000 (66 percent) are insolvent, the PNL points out.
The Liberals also propose an anti-discrimination law on the setting up of NGOs, a law that would eliminate the discriminatory criterion introduced by Government Emergency Ordinance no.25/2018: micro-enterprises that sponsor non-profit organisations should benefit from an income tax deduction of up to 20 percent for the quarter in which the said expenditure was registered, regardless of the field of activity of the NGO they decided to help. At the same time, the percentage of the income tax that natural persons can donate to non-profit entities should be hiked from 2 to 3.5 percent, without generating discrimination between said entities.
Another measure that PNL proposes is the deduction of salary expenditures registered during non-working days that have the status of public holidays.
“At present, the private sector must cover the costs of decisions that it cannot influence, namely the introduction of new non-working days. Thus, during the said days, economic agents pay their employees without the company obtaining the production of a working day. The number of non-working days, of public holidays, has consistently risen in recent years (11-15 days of public holiday, depending on denomination), so that in Romania the total number of non-working days totals more than half a working month,” the Liberals explain.
PNL proposes that the value of salary expenditures registered during public holidays be deducted from the taxes and contributions retained and paid by employers, so that neither the one paying the salary nor the one earning the salary would be affected by a subjective state decision to introduce new public holidays.
Another bill stipulates that the tax waiver for reinvested profit be extended to investments in new means of transportation. The sectors that will benefit from this measure and that will contribute to supplementary state budget revenues are: agriculture – the need to mechanise agricultural works; national and international freight transport, which features ever stronger relocation tendencies; public transportation, either handled by municipalities or leased to private operators; the boosting of river and naval transport capacities, in the context in which Romania is the eastern gateway of water transport; the boosting of air transport capacities.
Rendering the VAT payment code criteria transparent is another measure proposed by Liberals. At present, the criteria for the assessment of fiscal risk on whose basis the VAT code is offered or withdrawn is established via order of the ANAF President, without being published in the Official Journal and without being accessible to the taxpayer. “This gives birth to abuses, errors, arbitrary decisions with a disastrous impact on businesses. PNL wants this process to become transparent, namely the fiscal risk assessment criteria to be regulated through Fiscal Code methodological norms, approved by Government Decision and published in the Official Journal,” the PNL points out.