Please be informed that the VAT Split payment mechanism is applicable optionally starting with Sunday, October 1st, by the companies registered for VAT purposes which decide to benefit of certain tax incentives, but starting with 2018 it could be mandatory only for state-owned companies or for the companies which have contracts with the state, according to the latest Senate proposal, which will be submissive for vote in the Parliament.
The VAT split payment mechanism was introduced in the Romanian legislation through the Government Decision number 23/2017, in force from the first days of September.
According to the normative act, the application of the new system will be optional between October 1st – December 31st, current year, and mandatory starting with January 1st next year, date from which all the companies registered for VAT purposes will have a special VAT bank account for the VAT payments/cashing.
There are chances that the situation will be changed and the private companies to be excluded from the obligation of using VAT split payment or at least to be postponed until 2019.
Tuesday, September 26, 2017, in the budget-finance Commission of the Senate Chamber, the first Chamber which has to vote the new legislative project, it was proposed and accepted that the VAT Split payment mechanism will be applied mandatory starting with January 1st 2018, only by state-owned companies and companies in contractual relations with the state.
Related to the private companies, they would apply optionally from the next year the VAT Split system and only if it will be proven the functionality of the system, the companies have to adopt it mandatory from 2019.
Other important changes included in the legislative project are related to the enforcement of the special VAT bank account, which will be applied only for the payment of VAT and related to the applicable fines, which will be replaced with a notification for the first errors.
The proposals will be voted, in this form, by the Senate plenum and after this procedure the draft of the normative act will be presented to the Chamber of Deputies, the one which will decide on the final version of the VAT split payment system.
The document is debated currently in Parliament and it has a legislative path to follow, which it is hard to estimate when will be ended. In this situation, starting with Sunday, there are companies which could opt to apply the VAT split system in order to obtain the facilities provided by the OG no. 23/2017, respectively a reduction of 5% in the Corporate Income Tax due for the 4th quarter of 2017 and the cancellation of the penalties for the late payment of VAT due at September 30, 2017.
In this respect, the companies that will voluntarily apply the system will notify the National Agency for Fiscal Administration (ANAF), by submitting a notification – the form 086 “Notification regarding the option of application of the VAT split payment mechanism”. The format of the application was approved through the ANAF Order no. 2743/2017, published on September 26, 2017 in the Official Gazette.
Once the notification submitted, the tax authority (ANAF) will register the taxpayers in the Registry of the persons applying the VAT split payment, within maximum 3 days from the submission of the Form 086 and after that, the system will be applied starting with the day following the registration. The register will be available on the ANAF website.
As for certain payments from the VAT account will be required in advance an approval from ANAF, the institution has recently issued in public debate a draft of a normative act containing the procedure and conditions for approval of the transfer of funds from the VAT account.
Thus, the companies registered for VAT purposes, owning VAT accounts, will require to the Tax Authority to transfer the amounts from the VAT account by submitting the form 310 – “Application for the approval of the transfer of the amounts from the VAT account “.
Together with the form, the companies will have to submit also the supporting documents. The draft of the normative act refers to invoices, contracts, account statements or receipts.
The transfers will be done based on the checks of the Fiscal Authority and will be approved by issuing a resolution decision within 3 working days from the submission of the application.
Similar with the document which is approving the 086 form also the one setting the model for the form 310 should be in force starting with October 1st 2017, but it has to be published in the Official Gazette.
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