Ponta said Romanian officials took a firm stance in front of officials of the European Commission (EC) and ministers of the Economic and Financial Affairs Council (ECOFIN) and the conclusion is that Romania can still apply reserve taxation on cereal and thus fight tax evasion in agriculture.
Three weeks ago, the Romanian Parliament approved an ordinance extending for another year the interval in which Romania may apply reverse taxation on cereal, although the EC had rejected Romania’s request for a new extension in April this year.
The extension, which was made possible by amending an ordinance completing the Tax Code, allows Romania to continue applying a reverse taxation on cereal until May 31, 2014, instead of end-May 2013.
Romania in October last year asked for an extension of the system until 2015, after a similar extension obtained in 2011, which expires at the end of May 2013.
Reverse taxation entails that transaction taxes, such as VAT, are paid by beneficiaries instead of entities that deliver the merchandise. Romania’s Finance Ministry estimated reverse taxation was to bring in an extra 240 million lei (EUR54.4 million) to the state budget in 2011 and RON410 million in 2012.
According to official data, Romania loses out billions of lei annually from cereal trading due to VAT fraud. (EUR1=RON4.4090)