Methodological norms for the endorsement of Ordinance 17/2000 on value added tax (VAT) were finally published at the end of last week in the Official Gazette, more than a month after it passed through the Government.
The adoption of the respective methodological norms does not however clarify the confusion of most VAT payers, who, more than five months after the famous fiscal relaxation, continue to calculate their dues to the state in line with the old legislation.
“At present, commercial companies calculate VAT in line with the old norms, taking however into account several elements of ordinance 17 on the categories of services entering the domain of deductibility,” stated Nicolae Grigorescu, an accounting expert.
He says that the current state of confusion is maintained in the first place by the Fiscal Office, as territory representatives of the Finance Ministry do not know yet how to explain the current methodological norms. Normally, the current methodological norms should clarify several aspects related to VAT reduction or exemption (zero level). In line with ordinance 17 (adopted in December 1999), in Romania VAT amounts to 19 percent and is levied for deliveries of movables and for transfers of property for fixed assets operated in the country, but there is also a zero level. The zero level is applied for “exports of goods, transport and delivery of services directly linked to exports of goods, operated by taxpayers headquartered in Romania, whose equivalent value is cashed in, in foreign currency in banking accounts opened with banks authorised by the National Bank”. In other words, service exports are applied a zero VAT level only in case the equivalent value is cashed in, in foreign currency, in accounts of Romanian banks.
“The problem is that there were numerous cases where commercial companies operating exports registered losses because of this level,” Grigorescu says.
Thus, in the lack of methodological norms, the Fiscal Office interpreted the application of the zero level for exports in a different way as compared to the commercial company and penalised it.
Another anomaly or incorrect legislative interpretation consists in exemptions from the payment of VAT. In line with ordinance 17, contribution in goods to the share capital of commercial companies is included in the category of VAT exemptions.
This category also includes units authorised to develop sanitary activities, including veterinary and social assistance activities, financial investment companies, open investment funds and securities companies, insurance-reinsurance companies and book and school textbook printing and publishing.