Romanian companies have praised the recent Government proposal to pay VAT upon cashing a bill, rather than when issuing it, as under the current system. For companies it is the difference between pre and post payment of the tax. Prime Minister Victor Ponta proposed making VAT payment when cashing in bills for companies with a turnover below the equivalent of EUR 500,000, if the payment is made through the banking system.

The measure has long been called for by representatives of the business community in Romania and is likely to influence the activities of 92 percent of active firms, according to the Government. So far, companies have been paying the 24 percent VAT when issuing a bill, which was equivalent to lending to the state. The Government expects a reduction in tax evasion after applying this new regulation.

On the other hand, companies expect an improved cashflow, as many small business owners had to put in money to cover the VAT before having it reimbursed by the state.

editor@romania-insider.com