Draft legislation in Romania | KPMG | GLOBAL

Romania: Draft legislation clarifies VAT split-payment mechanism

Draft legislation in Romania

Draft legislation has been issued in Romania to clarify certain aspects of the value added tax (VAT) split-payment mechanism. The clarifying draft legislation provides:

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  • The VAT split payment would be optional beginning 1 October 2017 and mandatory beginning 1 January 2018.
  • There would have to be at least one VAT account for VAT collected and paid.
  • The deadline for suppliers paying VAT into their VAT account for payments received from customers via credit/debit cards or cash substitutes would be extended to seven working days from the date of the receipt of the payment for the goods/services supplied.
  • The tax administration would be required to approve the transfer of the amounts from the VAT account into the current account within three working days.
  • Time periods have been introduced, during which corrections could be made without penalties.
  • Taxpayers that use the VAT split-payment mechanism between 1 October 2017 and 31 December 2017 would benefit from a 5% reduction in corporate income tax, as well as the cancellation of any penalties for late VAT payment for amounts of VAT payable as of 30 September 2017.

 

Read an August 2017 report [PDF 358 KB] prepared by the KPMG member firm in Romania

Background

As originally proposed, all taxable persons and public institutions registered for VAT purposes would be required to open separate VAT accounts for receiving and making VAT payments. VAT accounts would be opened, by default, with the various treasury units within the tax offices where taxpayers are registered. However, any taxpayer could elect to open an account with a commercial bank (although, currently, not all banks operating in Romania have the relevant infrastructure to open these types of bank accounts). The VAT split-payment mechanism would apply to all taxable supplies of goods/services, from a VAT perspective, with the exception of transactions subject to the special regimes. Read an August 2017 report prepared by the KPMG member firm in Romania. The draft legislation (described above) is intended to clarify these proposals.

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