Accounting Treatment of Transactions with Partners with Invalid Vat Code

• Author: Sofian S.M. - Anton C.
• Position: Excelsum Consulting SRL, Brasov - Transilvania University of Brasov
• Pages: 129-134

Bulletin of the Transilvania University of Braşo v

Series V: Economic Sciences • Vol. 12 (61) No. 1 – 2019

https://doi.org/10.31926/but.es.2019.12.61.1.17

ACCOUNTING TREATMENT OF TRANSACTIONS

WITH PARTNERS WITH INVALID VAT CODE

S. M. SOFIAN1 C. E. ANTON2

Abstract: The value added tax is an indirect tax payable to the state

budget. Its complexity lies in the application of rights and obligations

regarding the exercise of the right of deduction or collection. The paper deals

with practical aspects of tax deduction and collection in relation to the

quality of trading partners, and the reflection of these transactions into

accounting. The research method used is the case study. The aim of the

research is to highlight the accounting treatments related to the peculiarities

of the commercial transactions with partners with the cancelled VAT code.

Keywords: VAT, accounting treatment, tax treatment, deduction -

collection, VAT code cancelled.

1. Introduction

The value added tax is an indirect tax payable to the state budget resulting from

economic transactions. The final customer bears this tax; the economic entities play an

intermediary role only.

The value added tax appeared for the first time in France in 1954 as an alternative to

the sales tax. In Romania, VAT was introduced in 1992 and aimed at replacing the tax on

the movement of goods.

The Value Added Tax mechanism assumes the existence of transactions between

commercial partners who hold the status of taxpayer.

Taxpayer means any person who independently c arries out any business, whatever

the purpose or results of that activity (Directive 112/2006). “Any per son” means the

individuals and legal entities, a group of people, public institutions that independently

conduct any kind of business in any manner or purpose.

The activity of producers, traders or persons providing se rvices, including mining and

agricultural activities, and activities carried out in liberal professions are considered to

be economic activity. The exploitation of tangible or intangible assets for the purpose of

making continued income is also considered to be economic activity (Directive

112/2006).

1 EXCELSUM CONSULTING SRL – Braşov, sofian.sergiu.mihai@gmail.com

2 Transilvania University of Braşov, carmen.anton@unitbv.ro