Romania To Introduce Mandatory VAT Split Payment Mechanism
By way of a recent measure that has resulted in numerous debates and raised significant criticism, the Romanian Government has decided to change the country's VAT payment system. The new VAT split payment mechanism's implementation is unique in the European Union, and affects all taxpayers registered for VAT purposes in Romania.
Under this new mechanism, VAT will be collected in a bank account, distinct from the current bank account, specifically where only the VAT-free amounts will continue to be cashed. Also, the input VAT incurred for acquisitions of goods or services will also need to be paid from the said VAT account.
The new VAT split payment mechanism:
will be optional starting from 1 October 2017 and mandatory as of 1 January 2018 for Romanian and non-resident taxpayers registered for VAT purposes in Romania; covers all B2B transactions for payments made via bank transfers; expressly sets out the situations where the VAT accounts can be credited or debited; in certain situations, calls for prior approval from the Romanian tax authorities for transferring amounts from the VAT account into the current account of the taxpayers; allows for certain incentives for qualifying taxpayers which opt to apply the VAT split payment mechanism during the trial period 1 October - 31 December 2017 (ie a 5 % reduction of their corporate income tax or micro-company tax, the cancellation of penalties for outstanding VAT liabilities as at 30 September 2017, under certain conditions). Comments:
the measure was introduced with the aim to improve VAT collection for...
To continue readingREQUEST YOUR TRIAL