Four unbeatable measures to fight evasion: “First, political interference should be eliminated. I have not heard about it in the CSAT”

The fiscal consultant Gabriel Biriș, a fiscal law lawyer, former Secretary of State in several governments of Romania, explained four ways in which tax evasion can be reduced. None of these strategies were implemented due to the lack of political will.

Fiscal consultant Gabriel Biriș accuses political interference in fiscal policy. Photo: Archive pers

The Supreme Council of Defense of the Country (CSAT) discussed, at the beginning of the week, about the impact of tax evasion on the economic security of Romania and ways to reduce it.

“CSAT has established That a coordinated and firm approach is required from all institutions with attributions in the field, to identify and eliminate evasion and tax fraud networks ”is shown in the Presidency statement.

In this regard, the members of the Council have agreed that some immediate directions are imperative: the intensification of the controls, the accelerated digitalization of the fiscal system and the use of all the legal tools to recover the damages to the Romanian state.

In addition, essential will be the creation of an “regulatory framework and articulated and coherent control, with concrete mechanisms of intervention for the authorized institutions and norms of professional integrity for employees. ”

The fiscal consultant Gabriel Biriș, a tax law lawyer, who was a Secretary of State in several governments of Romania, analyzes for “Adevărul” how the legal framework should be modified so as to improve the collection.

“First of all there are no political interference”

“First of all, there should be no more political interference. This cannot be done by law, it keeps something else. That even now, if the inspector goes to an inspection and receives an phone:” Well, what you are looking for “, it does not go. And there are many situations of this kind ”says Biriș. He argues that ANAF inspectors have the status of civil servants who should be a cover in such situations, except that, says the fiscal consultant, the legislation is not respected.

“And the fiscal legislation must also be improved, because, unfortunately, there are certain areas where corruption and endemic corruption and I refer in particular to VAT, I could intervene. I have always spoken of the generalized reverse tax as a practical tool to eliminate the VAT cashflow in B2B relations (transactions that take place between companies).”explains Biriș.

He also gave an example: “We collect now, let's say, under 70% of the collectible theoretical VAT. Some of the collected VAT comes from government consumption. The state pays VAT invoices, VAT in B2B, of which it returns 70%. Why do this? To have someone to stole.” Biriș stated in the pandemic did not pay VAT in customs for purchases of masks, disinfectants, etc. “I did not see a study to see how many of that money came back. Because what was happening? In Constanța Customs did not pay the VAT and sell to public institutions. How many of the money collected from the institutions returned to the budget. I do not know,” he explains.

“Half of ANAF inspectors work for 3% of the VAT requested for reimbursement”

Normally, each company deduces the VAT paid on purchases and collects on sales-the net VAT is transferred to the state. The reverse VAT charge system assumes that the trader does not pay the VAT on the goods he puts on the shelf. Then, the whole VAT it collects from the final customer has to go to the state.

With the reverse VAT tax system, says Biriș, only the small fraud, that is, the installer who does not give a bonus, the village shop that sells on the booklet. “But that means that there is 5% fraud,” he explains.

In addition, if the reverse taxation on the VAT were applied, the controls should focus only on those who collect VAT, “I mean, the companies in the retail and they have the advantage that you see them. So it would be much simpler and control. ”

This system can be completed with “Split VAT”, as in the US, where the sales fee is collected in a separate account, which the trader is not reached, the money is available to the state. “When you have the reverse charge, ie the trader does not pay the VAT to the goods he puts on the shelf, then the whole VAT he collects must be given to the state, then you can come up with VAT split measures or anticipated payments at the hypermarket, that it is not his money and it is easy to control. Plus that most of your refund requests disappear“He details. In the current system,” Split VAT “would block the economy, says Biriș.

In addition, he says, today out of 4,000 inspectors at ANAF, about 2,000 works on VAT refunds. “And from the VAT requested for reimbursement, 97% is confirmed. So, practically, half of the ANAF inspectors work on 3% of the VAT requested for reimbursement”, he explains.

“I have not heard anything from this at CSAT”

Another way to improve the amounts collected is the taxation of the amounts that cannot be justified by the natural persons. “We see every day, in traffic, all kinds of stories with tricks who spend tens of thousands of euros for a payment note in clubs. Where do you have the money? In 2011 when they made the law at the pressure of the IMF, they did not work. They had to do these controls. You spent ”, he explained.

The system is now completely inefficient: “They look at Instagram, on Facebook, I see what people spend, they still have data from the notaries. That is, it is completely inefficient. From 2011 so far they have cost us three times more the salaries of the inspectors than the collected amounts. Given the reference with this. You pay 10% and then you do not pay 70%.

Biris argues that we do not have a legislation on the transparency of the parked amounts in tax havens again.

“So I don't know what he talked about yesterday at the CSAT, but I didn't hear anything of all this”, Concluded Biriș.