The recently announced fiscal measures show an inconsistency of the governing program in the fiscal area and induce a state on uncertainty and unpredictability not seen since before Romania joined the European Union, said Alex Milcev, a partner and leader of the fiscal and legal assistance department with EY Romania, reports local News.ro.

According to him, the government should be aware that these measures involve a radical change of the fiscal policy. He also argued that the turnover tax might come against EU legislation.

“The turnover tax is rather more similar to the VAT and, consequently, the government needs to perform an analysis to determine whether it is in accordance with regulations to introduce it instead of the profit tax. There is a possibility that this tax is contrary to the provisions of the European Directive concerning the VAT and, as such, it is expected that the European Commission starts the infringement procedure,” Milcev said.

The EY partner estimates that the announced measures will impact especially taxpayers with a high turnover and low profit, such as retail and distribution companies, but also firms undergoing financial difficulties.

“This departure from the flat tax, the model which has served Romania well for over a decade, is expected to generate fiscal inequities,” Milcev said.

“At present, the fiscal legislation, the IT system of the tax collection agency ANAF and, of course, the taxpayers’ habits are based on the flat tax. It is not at all clear why this change of system is necessary, what would be the main changes, and in what way the inherent complications of such a change make the effort worthwhile,” he added.

One in three companies in Romania risks insolvency on new turnover tax

editor@romania-insider.com