After a period when all major business organizations – Romanian and foreign – have rejected the tax experiments especially those proposed by the Mihai Tudose government, AOAR moves further „from the reactive attitude in recent months to a proactive one” and sends to the Government suggestions for action wanted by the business environment.
Starting from a set of solutions presented on Thursday, AOAR launched the message: „We call for our government to start an honest, constructive, professional dialogue with the investors’ representatives in Romania. There are solutions, we can discuss them, agree and implement them. We shall all have benefits! ”
Principles promoted by business community
Florin Pogonaru, president of the organization, opened the press conference on Thursday with the following AOAR messages:
- We do not ask for lower taxes or exemptions.
- We ask for stability and predictability.
- We ask for a correct structure of taxes, without exception, we ask for quality public services offered by ANAF.
- We ask for protection against those who do not obey the law and make evasion. We cannot compete with those who steal VAT and use the undeclared work for their employees!
„We are afraid because the message is clear: we shall have a budget deficit problem, we shall have a tax collection problem. We are afraid that they will continue to cut investments, and social measures will continue to apply. As business people, we have a duty to say not just what we do not like, what we do not want, but to move a step further to the difficult part and say what we want and what should be done. Just as the Government has exposed itself to criticism, we too expose ourselves to criticism by putting a set of principles on the table, targeted measures that would improve the business environment,” said Florin Pogonaru.
Gabriel Biris, Partner of the advisory firm Biris-Goran, insisted: „Today it is not about criticism. We have concrete proposals that we present, publicly, to the Government.”
Concrete proposals
The proposals advanced by AOAR cover 4 areas:
- Corporate tax
We need fiscal consolidation of Romanian company groups to get the same conditions as foreign investors who consolidate at their home.
That would also enable Romanian owned groups to better organize their finances. The submission of the group consolidated corporate tax return does not only allow the group to recover tax loss faster but:
- Eliminates the need for the Romanian groups to prepare the transfer pricing file. It is a significant cost for the Romanian companies and also a significant cost for ANAF to audit these files for nothing;
- It would allow ANAF to use its (extremely fragile) resource to control the transfer pricing where there is a real risk of tax base erosion in Romania: external payments made specially to states that have low tax rates or are known to apply preferential tax regimes.
- We ask for the implementation as soon as possible and increasing the administrative capacity to implement the Anti-BEPS (Base Erosion and Profit Shifting) Action Plan.
Tax consolidation can make Romania a regional hub for investors, says AOAR.
2.VAT
The organization asks the Government to:
- accelerate the implementation of the IT systems they mention in the government program, namely the AMEF;
- introduce the electronic invoicing system in B2B;
- introduce SAF-T as soon as possible (Standard Audit File for Tax – reporting model that allows the remote control);
- eliminates from the Tax Code the unfortunate provision regarding the assessment by ANAF of „the intention and capacity to conduct taxable transactions”;
- makes every effort to amend the Directive 112 on VAT to allow the reverse charge in B2B and implement this option as soon as possible. The reverse charge and not split payments can eliminate the carousel fraud, while significantly reducing the administrative costs for both the state and the taxpayer.
- Income tax and mandatory social contributions
AOAR proposes the following solution:
- Reintroduce a ceiling on the basis for calculation of CAS and CASS for all types of revenues, on their total (not each revenue);
- For this to be possible, bring to an end the proposal from the program about transferring contributions from the employer to the employee and adjusting the gross wage accordingly and „globalizing” the incomes, but only where needed;
- Maintain and strengthen the system of withholding taxes and contributions.
- Eliminate exceptions. Exceptions are some citizens’ privileges for which other citizens must pay! That leads to disunity, but we need to strengthen the cohesion of this nation!
- The total tax burden should be based on HOW MUCH and not HOW we earn. Tax obligations should be the same for all residents in Romania, regardless of how revenues are obtained. Only this way the tax burden can be reasonable for all.
- Tax credit for crèches/kindergartens
We should deal with the future today. Investing in education is all the more effective as it is done earlier. There are studies that show how important early education is in the child’s first 5 years of life.
In the government program, you planned to build 2,500 crèches. Let’s build some of them together under a public-private partnership, where they are most needed!
We have the solution in the Tax Code even since 2004, we only need to extend it: the tax credit. We make crèches next to the factories or the office buildings, the employer pays for it and deducts the amounts from the tax due within the limit that needs to be calculated.
On this last point, Anca Vlad, President of Fildas Group, also proposed to the Government to rethink the post-natal leave allowance system by introducing a system of rapid reintegration into the labour market.
Anca Vlad proposes that mothers who can return to work after 6 months to still receive half of the allowance until the legal maximum term for granting it ends. This way, Anca Vlad states, the state would save a part of the budget allocated to these allowances and would collect new taxes.
