Romania recently made a change in the procedure for approving Value Added Tax (VAT) refunds from VAT returns which has been published in Romania’s official journal.
In brief, the change will mean that taxpayers identified as high-risk will qualify to receive a refund only after an audit. These high-risk taxpayers will be registered in a special database, which will be managed by a specialised department.
When any of the following conditions is met, a tax payer will be regarded as high-risk:
• The tax authorities receive official paperwork from other institutions, which address tax issues that could potentially influence a refund decision;
• The tax authorities identify criminal offences while conducting a tax audit;
• During a future tax audit, the tax office identifies differences which are more than 10% of the amount refunded but less than RON 50,000 for each return; and
• Tax inspectors find significant inconsistencies that are then checked and confirmed between the information submitted by the taxpayer (i.e. purchase lists and local sales and those provided by partners such as VIES, Forms 390 and 394).
However, it must be noted that these new procedures do not create additional obligations for taxpayers. Instead, they represent new powers and obligations for the tax authorities who will carry out this work after returns are submitted. The amendment has had effect from 1 May 2017 and we are monitoring the situation to assess its practical impact.