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Documents / ANAF amends evaluation criteria in procedure for granting VAT code

de Victor Bratu 2.10.2017

After the withdrawal of the “intent and ability” criterion for doing business and following the pressure of the business community, ANAF published on Thursday evening the draft of a new order on setting criteria for VAT registration.

The new draft order maintains the stipulation that the tax authority will not register for VAT purposes, respectively cancel the VAT registration if the taxable persons have a high tax risk.

According to the draft, each of the risk criteria set by ANAF (set out in Annex 5 and Annex 6 of the draft order) corresponds to a negative score. The final score that determines the level of the tax risk is calculated by summing up the scores for each risk criterion plus 100 points.

The taxable person has a high tax risk – namely, it is not given a VAT code – if the score is below 51 points.

Mention: Local branches of taxable legal persons having the headquarters of their economic activity outside Romania, which have the obligation to register for VAT purposes in Romania, according to the provisions of art. 316 par. (2) of the Tax Code, are not subject to this order’s provisions.

In the press release issued on Thursday, ANAF ensures that administrative procedures for registering/cancelling the VAT registration will become “more explicit, transparent and easier for taxpayers” – a big step forward, given that the details of the initial order issued in the period when the ANAF leadership was held by Gelu Stefan Diaconu have been “secreted” so that “fraudsters” could not know them and thus try to cheat the tax authority.

However, the critical change would occur if ANAF would abandon all the controversial provisions. Only two examples:

  • companies must already have employees when they request a VAT code, that is, from the moment they are established
  • lack of a qualification is considered a risk

Risk criteria

The first criteria for assessing the tax risk of taxable persons applying for a VAT registration are set out in Annex 5. They refer to:

Headquarters.

  • The registered office of the taxable person being analysed is established at the lawyer’s place of business and is used in a legal assistance contract and the taxable person analysed does not have headquarters/places of business.
  • The registered office of the taxable person analysed is established at the premises of a natural person who carries out liberal professions (exclusively a lawyer), a self-employed person (PFA), an individual enterprise, a family enterprise (IF), a legal person, as well as at a property of a natural person and is used under a commodity/lease/sublease agreement for a period of less than or equal to one year, and the taxable person analysed does not have a registered office/subsidiary.
  • The registered office of the taxable person analysed is established at the premises of a natural person carrying out liberal professions, a self-employed person (PFA), an individual enterprise (II), a family enterprise (IF), a legal person as well as at the property of a natural person and is used under a commodity/lease/ sublease agreement for a period of less than or equal to one year, and the taxable person concerned has headquarters/places of business under a commodity/ lease/ sublease agreements for a period less than or equal to one year.
  • The registered office of the taxable person analysed is established at the premises of a natural person carrying out liberal professions, a self-employed person (PFA), an individual enterprise (II), a family enterprise (IF), a legal person as well as at the property of a natural person and is used under a commodity/lease/ sublease agreement for a period of less than or equal to one year and the taxable person analysed has its headquarters/places of business under commodity/lease/sublease agreements for a period of more than one year.

Insolvency / Bankruptcy

  • At least one of the co-partners and/or administrators of the taxable legal person analysed holds or has held the capacity of shareholder/co-partner/administrator/ holder/member of at least one taxable legal person for which insolvency/bankruptcy proceedings have been initiated in the last five fiscal years and the taxable person has records of outstanding tax liabilities.

Tax inactivity

  • At least one of the co-partners and/or administrators of the taxable person analysed has the status of shareholder/ co-partner/ administrator/ holder/ member of at least one taxable legal person declared inactive from the tax point of view in the last five fiscal years without being reactivated.
  • At least one of the co-partners and/or administrators of the taxable person analysed has held the capacity of shareholder/co-partner/ administrator/ holder/ member of at least three taxable legal persons declared inactive in the last five fiscal years.

Temporary inactivity at Trade Register

  • At least one of the co-partners and/ or administrators of the taxable person analysed has the status of shareholder/ co-partner/ administrator/ holder/ member of at least two taxable legal persons having the legal term of temporary inactivity registered at the Trade Register expired without being reactivated.

Rejection/ cancellation of VAT registration

  • At least one of the co-partners and/ or administrators of the taxable person analysed holds or held the capacity of shareholder/ co-partner/ administrator/ holder/ member of at least one taxable person whose VAT registration has been cancelled during the last five full fiscal years.
  • At least one of the co-partner and/ or administrators of the taxable person analysed holds or held the capacity of shareholder/ co-partner/ administrator of at least one taxable legal person for which, since 01.02.2015, the VAT registration request has been rejected or the VAT registration cancelled following the evaluation procedure and the situation is currently maintained.

Outstanding tax liabilities

  • The total amount of outstanding principal tax liabilities recorded by the taxable persons to which the co-partners and/or administrators of the taxable person analysed have the status of shareholder/ co-partner/ administrator/ holder/ member and the co-partners (legal persons) and/ or administrators (legal entities) of the taxable person analysed, is higher than or equal to 50,000 lei.
  • The total amount of the outstanding tax liabilities recorded by the taxable persons to which the co-partners and/ or administrators of the taxable person analysed have held, in the last five complete fiscal years, the status of shareholder/ co-partner/ administrator /holder /member, is more than or equal to 50,000 lei.

Offenses                                           

  • At least one of the co-partners and/ or administrators of the taxable person analysed and/or at least one of the taxable persons where they hold or held the capacity of shareholder/ associate/ administrator/ holder/ member, have acts registered in the tax record of an offense nature that is stipulated in the government decisions 1000/2015 on the acts about which information is registered in the taxpayers’ tax records, according to the legislation in force.

Crimes

  • At least one of the co-partners of the taxable person analysed and/or at least one of the taxable persons to which the co-partners and/ or administrators of the taxable person analysed hold or held the capacity of shareholder/ co-partner/ administrator/ holder/ member have crimes and/ or acts registered in the criminal record, referred to in art. 4 par. (4) letter a) from O.G. 39/2015 on the fiscal record, approved with amendments by Law no. 327/2015.

Income

  • The administrators of the taxable person analysed did not obtain any income in the last 12 months prior to the month in which the application for the VAT registration is filed, respectively in the previous fiscal year, where applicable.
  • The administrators of the taxable person analysed have obtained in the last 12 months prior the application for the VAT registration, only salary incomes predominantly in value, by caring out occupations corresponding to the major group 9 (according to COR ISCO08), namely unskilled workers.

Tax residence

  • At least one of the administrators of the taxable person analysed is a foreign citizen who does not have a fiscal residence in Romania and the share capital of the taxable person analysed is below 45,000 lei.

Bank account

  • The taxable person analysed does not have a bank account or at least one of the persons empowered by the taxable person analysed to carry out operations with its bank accounts does not have the status of administrator/ co-partner/ employee.

Activity

  • The taxable person analysed does not carry out economic activities within the space intended to be the registered offices and/or the space of the secondary offices, nor outside them.

Third parties

  • The taxable person analysed carries out only economic activities outside the registered offices/ place of business and the secondary offices (places of activity)

Accounting services

  • The taxable person analysed does not designate a person to lead the accounting department or has designated a person who does not meet the provisions of art. 10 par. (2) of the Accounting Law 82/1991, republished, as subsequently amended and supplemented, if the accounting activity is organized and managed in separate departments, including the situation in which the taxable person analysed does not have contracts for services with legal entities/individuals that are CECCAR active members if the accounting activity is organized and managed based on accounting service contracts.

Employees

  • The taxable person analysed does not have individual employment contracts concluded at the time of the analysis.

Separated, in Annex 6, ANAF introduces the notion of inconsistencies among the risk criteria.

The taxable person analysed has significant inconsistencies between the information mentioned in its own tax/ information/ recapitulative statements, respectively, between the information recorded in its own tax/ information/ recapitulative statements in relation to its business partners (suppliers/ customers), including significant discrepancies found in the analysis of the information provided by third parties, other than those relating to tax/ informative/ recapitulative statements,” states the text.

Unlike the other evaluation criteria, the appendix does not detail the exact meaning of the expression “significant inconsistencies”.

It is also quite unclear what the information provided by third parties “other than those relating to tax/ informative/ recapitulative statements” might be.

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