The published figures indicate an improvement in the collection in Romania as well, which registered a VAT gap of 33.8%, the lowest in past years. However, the results put us once again in the last place in terms of the efficiency of the VAT collection at the EU level, as the state budget continues to lose more than EUR 6.5 billion from uncollected VAT.
„Further efforts are still needed to combat VAT fraud and evasion and the COVID-19 pandemic is liable to further hamper this fight. The European Commission recommends tax administrations to simplify procedures and improve cross-border cooperation in a context where forecasts for 2020 indicate a reversal of the trend towards a reduction in the VAT deficit. The effects of the pandemic, which will be felt economy-wide, will also impact VAT collection, with the study showing that an increase of the VAT gap by almost 13.7% is expected for 2020.”, mentioned Alexandru Stanciu, Tax Manager, Mazars Romania.
The reform and digitalization of NAFA must become Romania’s number one priority, to the detriment of multiple legislative changes that, in general, failed to contribute to increasing VAT collection, the best examples being the famous 088 statement on the registration for VAT purposes or the VAT split system, measures which proved ineffective and were finally abolished.
„There is no such thing as a one-size-fits-all solution to fraud and tax evasion, but the experience of other countries where the VAT gap shrinked significantly shows that a digitalisation of the tax administration is one of the best practices. The real-time access of tax authorities to the business transactions of companies, the e-audit, or the Standard Audit File for Tax (SAF-T) are tested methods for tax compliance that are beneficial for both taxpayers and tax authorities, with the tax audit thus gaining significant effectiveness. The best example to that extent is given by our Hungarian neighbours, who in 2018 reported the sharpest fall of the VAT gap in the EU, by. 5.1%, following the implementation of the real-time reporting of business to business transactions.”, mentioned Bianca Vlad, Partner, Tax Advisory, Mazars Romania.
The connection of fiscal cash registers to the NAFA servers, which began to take shape this year, can also be another digital solution liable to outweigh the rising VAT gap generated by the current context.
„The implementation of the technology is essential and carries clear benefits, especially in terms of the interaction between the NAFA and taxpayers via electronic platforms, and the completely digital VAT reporting is imminent. We look forward to the Ministry of Finance initiative to implement the SAF-T, firstly as a pilot project for the large taxpayers – a measure by which Poland managed to lower the VAT gap from 24% in 2015 to 9.9% in 2018.”, mentioned Miruna Cîrstea, Tax Senior Consultant, Mazars Romania.
However, the implementation of the VAT definitive system which is scheduled for 2025 remains a priority for the EU, as Member States can no longer afford to lose billions of EUR from the VAT fraud and the inconsistency of the current system. Until then, it will be interesting to monitor and assess the impact of the VAT quick fixes package that has been introduced as a short term solution on the 1st of January 2020, as well as the new set of measures for e-commerce, whose implementation has been temporarily postponed until the 1st of July 2021.
Emilia Popa, Head of Marketing and Communication, Mazars Romania
Emilia.Popa@mazars.ro | +40741.111.042
Mazars is an internationally integrated partnership, specializing in audit, accountancy, advisory, tax, and legal services. Operating in 91 countries and territories around the world, we draw on the expertise of 40,400 professionals – 24,400 in the Mazars integrated partnership and 16,000 via the Mazars North America Alliance – to assist clients of all sizes at every stage in their development.
In Romania, Mazars has 25 years of experience in audit, tax advisory, financial advisory services, HR advisory, and accounting & payroll services. The local team has 230 professionals.
www.mazars.ro | https://www.linkedin.com/MazarsRomania/
 Where permitted under applicable country laws