Parliament debates new VAT Law

The Senate today will discuss the new VAT Law to be enforced on January 1, 2002, after the Finance-Banks commission had discussed it two days ago for almost 12 hours.

The commission’s tour de force allows the draft to be endorsed before the beginning of parliament vacation, which will spare the Government a bureaucratic operation, namely to withdraw the draft and pass it by emergency ordinance to observe the pledge it made to the IMF, to enforce the new norms on January 1, 2002.

The Executive seems to have considered this option as well, as long as the draft Law allowing the government to issue ordinances during the parliament vacation includes an article that makes way for this law to be passed by emergency ordinance, although the Constitution stipulates that no emergency ordinances can be issued during parliament vacations.

“If the endorsement of this law is delayed, we will still be able to pass the law by an emergency ordinance,” Finance minister Mihai Tanasescu said.

According to the new law, the standard VAT quota will stand at 19% for the deliveries of goods performed in the country and for the imported goods.

Most services are levied the standard quota, but there are several exceptions that benefit from zero VAT quota, such as the exports of goods performed by the taxpayers headquartered in Romania, the shipment and services directly related to the exports of goods.

The novelty of the draft is that the subjects do not have to prove they have cashed the hard currency value of exports in order to benefit from the zero VAT quota.

International transports of passengers to and from abroad, performed by the authorised taxpayers on regular routes, as well as the services directly related to this activity also benefit from the zero VAT quota.

The natural persons carrying economic activities based on free enterprise and freelancers will not pay VAT as of January 1. The measure was taken because it was concluded that these activities involved administrative costs exceeding the value of the cashed amounts.

On the opposite, the stipulation according to which house building benefited from zero VAT quota was cancelled.

The new law also cancels certain incentives granted through special laws: tourism activities having benefited from zero VAT quota and the revenues derived from the political parties’ own activities, if these activities generate revenues, do not benefit from zero VAT quota any longer.

As requested by the International Monetary Fund, the stipulation according to which the goods exempted from customs tax payment were also exempt from VAT was cancelled.

Moreover, the norm stipulating that the public institutions’ imports funded by loans contracted on the foreign market were exempt from VAT payment was also withdrawn.

The new law deals with the free zones in a separate article that includes all the activities on which the VAT 19% standard quota and the zero VAT quota are levied.