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Business environment: Two of the tax law changes bring taxpayers in the position to no longer be able to obtain cancellation of the notices of assessment

de Razvan Diaconu 14.12.2016

 

cod_fiscal-300x200The Coalition for the Development of Romania (CDR) points out that the legislative package for simplifying and improving the tax legislation, recently approved by the Ministry of Finance and the Government, there are two provisions that will cause major implementation problems both for tax authorities and taxpayers.

According to a press release issued Monday by the organization, CDR reports:

The amendments to Article 165 of the Tax Procedure Code will put taxpayers in the position of not being able to obtain the cancellation of the documents of assessment issued following a tax audit, as their current payments based on the notices of assessment, made before the payment deadline from the document, will discharge tax obligations from this document and not those which are due and taxpayers seek to discharge.

Article 229 has also been amended so that for the attachments of the bank accounts from the enforcement proceedings, taxpayers will no longer be notified on the amount and nature of the debit. Taxpayers will have difficulties to defend themselves because of this lack of transparency, because they will know from the beginning neither the amount of the bank attachment nor the reason.”

The press release also states: CDR supports the fight against tax evasion, a predictable tax environment and a balanced relationship between taxpayers and authorities.

In this context, it is worth mentioning that most of the amendments recently made to the Tax Code and the Tax Procedure Code are welcomed and took into account the views of the business environment, but these two changes mentioned above represent a significant step back from the previous legislation and are not founded on solid or convincing legal arguments that would emphasize the need to adopt them.

Technical specifications of the Coalition are:

First, we consider changing art. 165 of the Tax Procedure Code, following which the period of the tax obligations imposed based on a tax audit will depend on the moment when the tax decision was communicated and not the payment deadline for the legal tax obligations, as it was prior to the amendment.

This change will, however, automatically lead to settling the tax obligations, even before their legal payment deadline expires, by the payments made by taxpayers in good faith for covering the current tax liabilities, which will remain as arrear.

Even worse is removing de facto the taxpayers right to obtain cancellation of the administrative-fiscal document of assessment, which becomes this way purely theoretical and illusory, as this option is still available under the existing legislation, but remained without any practical utility.

Cancellation of the enforcement of a document of tax assessment is one of the fundamental guarantees for taxpayers, traditionally accepted in the administrative and fiscal area, which at no time in the post-revolutionary history of the tax law has been questioned or challenged.

The amendment is even more surprising as in the initial phase of the public debate organized under the rules of transparency for the legislative process, the arguments raised by the Coalition against it have been accepted. Inexplicably, though, given especially the lack of any reasons in support to the measure, not even in the explanatory memoranda, the amendment is found in the final version of the legislative act.

Then it needs to be mentioned that the amendment of Art. 229 of the Tax Procedure Code, for eliminating the requirement that the enforcement procedure to mention the amount and nature of the debit in the case of the attachment of a bank account practically annuls the debtor’s right for defence, depriving them of a minimum of information that would enable the checking of the enforcement legality. This legislative change is likely to annihilate the progress of the civil procedure made in terms of enforcement procedure over the last century, whose provisions were included in the tax law as they represented the best practices in this area.

It is imperative that such details to be mentioned in the documents of the enforcement procedure, as a need for transparency and control of such measures, against the very serious consequences that they might cause.

The Coalition for the Development of Romania is a private initiative, apolitical, built as a collaboration agreement through collective participation of its members. The Coalition’s members voluntarily contribute resources and expertise to the formulation of common opinions on public policies impacting the business environment. The coalition comprises 45 organizations and associate members.

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