System of VAT Payable upon Receipt–Facility or Burden?

Paliu-Popa, Lucia and Ecobici, Nicolae (2013): System of VAT Payable upon Receipt–Facility or Burden? Published in: WSEAS Brasov No. Advances in Accounting, Auditing and Risk Management (1 June 2013): pp. 70-74.

Abstract

Amid the growing discontent of the Romanian business environment regarding the collection and hence, payment to the state budget of the value added tax (VAT) related to the claims arising from the goods delivered, work performed or services provided to third parties, claims that, because of the economic and financial blockade mostly created by public institutions are not collected in good time for the payment of the related tax obligations, the State, by Government Ordinance no. 15 from the end of august 2012, "tried" to eliminate this drawback by introducing the system of VAT payable upon receipt. But, on the one hand, the system was applied in a discriminatory manner, since January 1, 2013, only by entities normally registered for VAT, which during October 1, 2011 - September 30, 2012, had a turnover of up to RON 2,250,000 inclusive, and on the other hand, the effect is not what the entities expected, since VAT is not always collected only upon receipt of claims, but also before that time, if the amounts are not received within 90 days. However, VAT deduction is not allowed in the same period from issue of the invoice, if the beneficiary failed to pay the debt, thus violating the principle of neutrality of VAT, circumstances that may adversely affect the taxpayers. In this context, using the theoretical approach and the empirical research, we will prove that the application of VAT system payable upon receipt does not benefit the entities, regardless of the category in which they fall; but the disadvantages outweigh the benefits and the positive effects can be reflected only in the state budget.

• Item Type: MPRA Paper
• Language: English
• Keywords: VAT payable upon receipt, chargeability of VAT, VAT deduction, VAT payment, undue VAT, collection.
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M41 - Accounting

References

Ministry of Public Finance Order no. 1519 of 19 November 2012 approving the Guidelines on the VAT cash accounting system application, published in Official Gazette no. 792 of 26 November 2012.

Government Ordinance no. 15 of 23 August 2012 amending and supplementing Law no. 571/2003 on the Tax Code, published in the Official Gazette no. 621 of 29 August 2012.

Council Directive 2010/45/EU of 13 July 2010 amending Directive 2006/112/EC on the common system of value added tax as regards the invoicing rules, published in the Official Journal of the European Union no. L 189 of 22 July 2010.

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, published in the Official Journal of the European Union no. L 347 of 11 December 2006, as further amended and supplemented.

Law no. 571 of 22 December 2003 on the Tax Code, published in the Official Gazette no. 927 of 23 December 2003, as further amended and supplemented.

Code of Civil Procedure.

http://www.anaf.ro/public/wps/portal/ANAF/Informatii/Infoagec/TVA