PwC Romania survey: 82 percent of respondents have overdue debts to the state budget and can apply for tax amnesty

The vast majority (82 percent) of respondents to a survey conducted by PwC Romania have unpaid debts related to the main budgetary obligations due on 31 March and qualify to apply for the tax amnesty regulated by Government Emergency Ordinance no. 69/2020. The survey was conducted during an online event attended by 104 representatives of companies.

When asked whether they have unpaid ancillary budgetary obligations related to main budgetary obligations due on 31 March 2020, the respondents answered as follows: 32 percent have such obligations that they declared and have not yet paid, 32 percent have such obligations established by a tax decision communicated by 31 March 2020, 18 percent have these obligations set by an amending declaration filed as of 1 April 2020 and 18 percent have obligations paid by that date, but late in maturity.

“The novelty of the current fiscal amnesty is that it targets, in principle, all taxpayers, individuals or legal entities, as well as the inexhaustible accessories for all types of fiscal and budgetary obligations. We hope that this mechanism will generate more liquidity for companies in difficulty and be an incentive to resume their activities. We also need to make sure that all taxpayers receive fair tax treatment and, for this reason, consultations are ongoing with the Ministry of Public Finance and ANAF, which are currently working on a document to clarify how the measure will be implemented”, said Daniel Anghel, Partner and TLS Leader of PwC Romania.

Consequently, it is expected that those who submit the cancellation request by 15 December 2020 will benefit from the cancellation of the accessories and clear both the main outstanding tax obligations as of 31 March 2020, as well as the main tax obligations and accessories with a maturity of 1 April 2020 and the date of submission of the application for cancellation. Accessories related to the differences between main fiscal obligations due on 31 March 2020 and those imposed by communicated taxation decisions following tax inspections ongoing as at the date of entry into force of the normative act are also cancelled.

“This ordinance is also a chance for those who failed to initiate and / or successfully complete the previous amnesty. Compared to the time and energy involved, it is better to take the new option than to initiate a legal dispute, even if it is one with a straightforward solution. The experience with the old regulation, however, proves that the procedure for applying the amnesty, although it seems simple, can generate problems, so that non-correlations between declarations and payments, even in small amounts, can compromise its application. For this reason, a very careful analysis is required”, said Dan Dascălu, Partner and Tax Litigation Coordinator of D&B David si Baias.

He specified that an important aspect causing debate concerns the answer to the question of exactly the hypothesis of submitting the rectifying declarations within 10 days from the entry into force of GEO no. 69/2020 for the taxpayers that would be submitted after this time a tax inspection. “It was recently expressed that this hypothesis would apply to any tax inspections initiated after the entry into force of the ordinance, which would be virtually devoid of any legal effects the amending declarations submitted by taxpayers at a time when they are not yet subject to tax inspection. Therefore, we will continue to discuss with the tax authorities, which are currently preparing an act to implement the ordinance, in order to clarify these issues and eliminate the risks of such a misinterpretation, which could compromise the purpose of the ordinance”, said Dan Dascalu.

In the survey, 53 percent of respondents said they have due claims for the period up to 31 March for which they intend to file tax returns or tax returns.

At the same time, 92 percent expect to establish differences in additional tax obligations prior to the period until 31 March 2020 in a tax inspection or verification of personal situation.

“We see that there are ongoing inspections, including inspections started during the state of emergency, and we expect that in the next period an intense wave of inspections will be initiated. It must be kept in mind that the authorities’ approach is now different from five years ago. For this reason, it is important to review past periods, analyse changes in the business model, because practice shows that the way companies operate has changed over time, including during the pandemic, and these changes can lead to tax risks, assessment of transfer pricing policies, etc. The tax treatments applied in recent years should also be reviewed, corrections made, if required, and tax amnesty requested, if appropriate. Thus, the fiscal risk can be diminished in the event of a future inspection”, added Ruxandra Târlescu, Tax Services Partner of PwC Romania.

The survey was conducted during the online event “Fiscal amnesty regulated by GEO no. 69/2020 “organised by PwC Romania and held on 22 May.