Moreover, the government has said it has no plans to renounce reverse taxation at least until 2018.
Reverse taxation entails that transaction taxes, such as VAT, are paid by beneficiaries instead of entities that deliver the merchandise. Authorities said this taxation system is one of the most efficient ways to fight tax evasion, by eliminating “ghost companies” that evade the sales tax.
In May, the Romanian Parliament approved an ordinance extending for another year the interval in which Romania may apply reverse taxation on cereal, until May 2014, although the European Commission had denied the country’s request for a new extension in April.
Recently, however, the Council of the European Union introduced a rapid response mechanism to fight sales tax fraud, which allows EU member states to extend reverse taxation, a decision the Romanian government is now citing to keep reverse taxation on cereal indefinitely.
In July, the Romanian government decided to apply the reverse taxation system on electricity deliveries and green certificates, in a bid to fight tax evasion and eliminate cash-related problems encountered by economic operators.