EY Romania: Massive investments in digital solutions required for better VAT collection

The Romanian tax authorities need to align with global trends and invest massively in digital solutions to improve the VAT collection process, explain EY Romania representatives in a release on Thursday.

The consultancy firm references the recent report released by the European Commission on the VAT gap registered by member states, that presents estimates for 2016, and where Romania stands out by the poor performance in collecting the tax, with a VAT collection gap of 35.88 percent.

More specifically, the Romanian tax authorities have failed to collect about 36 percent of the collectable VAT, while Bulgaria and Hungary are making visible progress towards reducing the VAT gap, the EY Romania representatives explain.

According to Ana Maria Domsa, EY Romania Associate Partner, despite the complexity of the implementation of digital solutions, in the longer term these measures generate both more efficient reporting processes and lower reporting costs and VAT inspection costs.

"How is it possible that a relatively large number of EU member states are headed in the right direction, while Romania is struggling hard with the VAT collection exercise? What is their secret, given that the measures applied by the Romanian tax authorities, including the cut of the VAT rate from 24 to 19 pct, did not have the expected impact on VAT collection? In the European context it is obvious that the tax authorities are choosing the digitization pathway, which constantly reduces the VAT collection gap. The taxpayers have to align with this trend and accept the pathway towards digitization to ensure the continuation of their economic activities and compliance with long-term requirements," Domsa explains.

VAT statements with aggregate figures by operation types, which Romanian taxpayers submit electronically, are not a form of digital tax reporting. Digital reporting involves the transmission to the tax authorities of information related to a company's operations broken down to invoice level (transaction with transaction), either periodically, or in real time. AGERPRES (RO - author: Oana Tilica, editor: Andreea Marinescu; EN - author: Simona Klodnischi, editor: Simona Iacob)