Government maintains fiscal predictability: no progressive tax in the coming years

The progressive tax is not on the agenda of the current government, as long as one of the coalition partners considers the approach to the subject as a red line regarding its participation in the Executive, said Marius Alin Andries, Secretary of State in the Ministry of Finance, yesterday, at the annual tax conference organized by PwC Romania.

Mr. Andries also said: "The government aims to consolidate fiscally in the next seven years according to the structural plan agreed with the European Commission. Therefore, the fiscal year 2025 and the state budget are based on this structural framework, which was established by the small train ordinance from the end of 2024, which established certain fiscal measures, and our objective is to meet the deficit targets and achieve fiscal consolidation, which is also important from the point of view of financing costs. (...) Our objective is fiscal predictability and discussing all measures with the business environment. At the moment, we do not have any set of fiscal measures on the table that would be approved or for which there is political agreement. The only fiscal measures for 2025 were established by the train ordinance".

Regarding the structural plan established with the European Commission for the next seven years, the Secretary of State at the Ministry of Finance specified that it includes a clear fiscal consolidation trajectory and a series of reforms aimed at ensuring budgetary balance. Among the key measures are the following: continuing public investments, which in recent years have represented 6-8% of GDP, investments about which Mr. Andries said that in 2025 and 2026 these will increase significantly; phased tax reform, based on a study currently being updated with the World Bank and other international partners, with the measures to be agreed with the European Commission and then debated by the business community; property taxation starting in 2026, as well as improving collection and digitalizing tax administration.

Regarding the turnover tax established in the fall of 2023, Marius Alin Andries stated that the measure is currently being analyzed for certain CAEN codes in the oil and energy sectors, with discussions about its possible maintenance to support fiscal consolidation.

• Alexandru Drăghici: "The biggest challenge for ANAF is fake news"

The Vice President of ANAF, Alexandru Drăghici, said that at this time the biggest challenge for the institution he leads is fake news.

Alexandru Drăghici stated: "The biggest challenge in our activity lately is fake news and disinformation related to ANAF's activity. There was recently a campaign regarding the summons issued by anti-fraud inspectors, a document that has existed since 2015, but in which anti-fraud has now been introduced. The message spread in the press was that we will put people in prison if they do not respond to the summons. Therefore, every day we have to justify ourselves to such fake news that discredits the institution and its way of working. Let's not forget that ANAF has 18,000 employees, not all of whom work on tax anti-fraud."

The Vice President of ANAF presented the institution's main objectives until 2028, emphasizing the continuation of the reform and modernization of the public institution, the prevention and fight against tax evasion, as well as the improvement of interaction with taxpayers and the business environment.

According to the ANAF representative, one of the most important advances made in 2024 was the implementation of the digital modules E-Transport, E-Invoice and E-VAT, which generated numerous debates, but have begun to produce visible results in reducing tax evasion. In the field of tax inspection, Alexandru Drăghici stated that the objective for 2025 is to increase interaction with taxpayers by 60%, compared to previous years. The Vice President of ANAF stated that, if in 2019, tax inspectors interacted with approximately 20,000 taxpayers, currently their number has reached 60,000 through notifications and control actions. Regarding advance pricing agreements, Drăghici emphasized that they bring a greater degree of fiscal predictability and reduce the pressure of tax inspections on companies. He also stated that the main purpose of the E-VAT module is not coercive, but aims to increase the voluntary compliance of taxpayers.

Alexandru Drăghici stated: "Regarding e-VAT, the purpose of this module is not necessarily in the coercive area, to extract data and sanction. Our objective is to increase the voluntary compliance of taxpayers. As long as the data is correct, we will find that the interaction of economic agents with control bodies will be increasingly less. We do not pursue sanctions, we have not made an instrument that would be the basis for sanctions. The share of the amounts attracted from sanctions is not substantial for ANAF's revenues and actions. The role of e-VAT, e-Invoice and e-Transport is to clean up the business environment so that any business can be carried out in a fair competitive environment from a fiscal point of view".

Another major objective of ANAF is to reduce the VAT gap, given that VAT losses are still significant. That is why the vice president of ANAF believes that, by implementing and generalizing the new digital modules, a substantial reduction of this gap will occur.

• DGAF: All anti-fraud controls are carried out based on a risk analysis

The Inspector General of the General Directorate for Fiscal Anti-Fraud, Teodor Georgescu, explained that all anti-fraud controls are carried out based on a risk analysis, except in situations that require rapid interventions or when there are requests from criminal investigation bodies.

Teodor Georgescu specified: "When the control is requested by criminal investigation bodies, there is no need for a risk analysis because the control objectives are established by the respective institutions. The two important components of the risk analysis are the volume of information available and the automatic modules for analyzing it. With the new declarative obligations imposed on the business environment, we have a very large volume of information available to us in a very short time, which allows us to intervene quickly. We want to identify fraud early and intervene in such a way as to limit the damage to the state budget as much as possible and recover it as quickly as possible."

The DGAF head also said that in 2025 the institution he leads will focus on the following high-risk areas:

- E-commerce, because online transactions have grown exponentially, and fraud in this sector, including courier fraud, remains at a high level. Teodor Georgescu specified that tourist intermediation platforms such as Booking and Airbnb have started to provide data on users' income, which will facilitate tax controls;

- Intra-community transactions, because, with Romania's accession to Schengen, the first border control filter was eliminated. However, the RO e-Transport system has become the main tool for monitoring products with tax risk and DGAF will create through it an accurate database of transactions carried out;

- Excise products, alternative transport and delivery services, where problems are observed regarding the payment of taxes and duties for employees of companies in these sectors of activity.

• New legislative changes in the tax field

Daniela Tănase, Deputy Director General at the Ministry of Finance, mentioned that the Government will soon approve an emergency ordinance for the transposition of European directives on the special exemption regime for SMEs and VAT rates. Among the essential changes is the increase in the exemption ceiling for SMEs from 300,000 lei to 390,000 lei, while the annual exemption ceiling for SMEs operating in other EU countries must not exceed 100,000 euros.

Geti Toma, Head of Service at the General Directorate of Fiscal Legislation, discussed the construction tax (pillar tax), stating that the Ministry of Finance had meetings with representatives of the business environment to analyze the impact of this tax and the possible necessary changes to the Fiscal Code.

Ms. Toma stated: "The key points will concern the tax value, the tax regime of those modernization works or other works that are generally carried out on the part of the buildings that are in use under a lease or other form of use. Another aspect is related to the fact that in certain sectors of activity or in connection with local taxes, value connections must be made. The construction tax is established by difference in relation to the buildings for which tax is paid to the local authority. Any changes will be communicated and there will be a broad debate with representative organizations of the business environment before their promotion." The 21st annual tax conference organized by PwC Romania brought to the forefront the perspectives of tax authorities and experts in the field on the main reforms and measures that will shape Romania's tax landscape in the coming years. Representatives of the Ministry of Finance, the National Agency for Fiscal Administration (ANAF) and the General Directorate for Anti-Fiscal Fraud (DGAF) provided details on strategies, objectives and challenges in the process of fiscal consolidation, improving collection and digitalizing tax administration.