In this edition, EY specialists approached issues of tax regulations in Romania with impact on tax reporting, direct taxes and indirect taxes, as well as the latest developments in tax and tax procedures at a global level.
Among the themes approached during the 13th edition of the Annual EY Tax Conference were: 2019 trends in taxation and the need for transformation in Romania, Romania's fiscal strategy and alignment with international trends, changes in tax legislation with impact for 2019 in the field of direct and indirect taxes or the 2019 challenges of income tax. At the same time, EY specialists analyzed international interest topics such as Brexit and some of its tax consequences for taxpayers in Romania and the legislative challenges for Romania brought by the European VAT Directives.
Romania will have to take action on the split VAT payment mechanism, otherwise the infringement procedure may continue says Ioana Iorgulescu, Indirect EAS Associate Partner Romania: "The year 2018 did not bring any major changes to the VAT legislation. Perhaps the most important was the introduction of a reduced 5% rate for restaurant service provision. The year 2019 is, however, more provocative for Romania, given that in November 2018 the European Commission sent a formal notice to our country on the VAT split payment mechanism, requesting it to cease applying it, thus making it the first step towards delaying the infringement procedure. Therefore, in 2019, Romania will have to take action in this respect, otherwise the infringement procedure may continue. "
Furthermore, in 2019 (by the end of the year), the so-called "quick fixes" - fast-track solutions adopted at the end of 2018 at European Union level will also have to be implemented in Romania. These concern intra-Community trade in goods and are aimed at reducing VAT fraud.
Stela Andrei, Director, Income Tax and Social Contributions EY Romania said: "Changes in the fiscal field for the construction industry raised many questions about how to implement them. Will these changes address the issues raised in this area regarding labor shortages and tax evasion? The relaxation of the conditions for obtaining work permits for foreign citizens could help to solve, to some extent and in some areas, the problem of the labor shortage. In other areas, such a solution could come in the context of employers' concern to create flexible and attractive incentives and employee retention policies. "
Amendments to the Pension Pillar II will pose challenges for both taxpayers and their option to transfer, under certain conditions, to the first pension pillar and the funds administering these private pensions that will be affected by the new legislative requirements.
As a result of the exchange of information both between Romanian authorities and between states, several controls are expected regarding the taxation of salary and personal income, tax residence and employee mobility for both foreigners coming to Romania and for Romanians who go abroad.
Gabriela Bancescu, Senior Manager, Transfer Pricing EY Romania says that Risk management becomes a priority in the field of transfer pricing: "In the context of the increase in the number of controls carried out by the Romanian tax authorities in the field of transfer pricing and given their complexity, risk management in this area is a priority for Romanian taxpayers."
Thus, proper pricing and documentation of intra-group transaction prices, as well as the management of tax controls and the settlement of possible pricing disputes are critical issues for any multinational company.