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PwC Romania: 72% of the companies say they need at least 6 months for implementation the split VAT
Almost three quarters of the companies which take part in a survey made by PwC Romania stated that they estimate they need a term of at least six months to implement the split payment of VAT and less than 2% consider they will manage to do it before 1 January 2018.
‘Taking into consideration the need of the private companies for a longer time to adapt and a possible risk of infringement of the community legislation as regards VAT, as the authorities did not consult with the European Commission before, we consider that it would be adequate that the government take into consideration the extension of the period for the split payment of VAT to be made by companies as an optional choice and not as compulsory’ Daniel Anghel, leader of indirect taxes with PwC.ECE.
According to the survey, 21% of those over 100 participants in the survey state they need more than a year to implement the new system, but most (51.3%)estimate a period of 6-12 months. A little over a quarter (26.1%) of the representatives of the companies consider that they need 3 to 6 months, while only 7.1% see as feasible an adoption of the split VAT mechanism during the interval of up to 3 months offered by the authorities.
The survey was answered by over 100 managers and financial managers of some companies. A study made previously by PwC for the European Commission referring to the feasibility of the implementation of such a system showed that the business environment would need a period of 2 to 4 years for a transition to the split VAT system which would not cause difficulties to the companies.
In order to draw the companies to adopt the new split VAT system from the period when it is optional, the authorities offered incentives, but they do not prove to be sufficiently attractive to convince the companies. According to the survey, 95.4% of the companies will not implement the new system during this period of October to December 2017 while only 4.6% state they will migrate before the moment it becomes compulsory.
‘The high percentage of the companies which will not take the split VAT until the moment it is compulsory should make the authorities think twice. A postponement of the deadline of 1 January would be very useful, as it would give the private environment the necessary time to adapt to this radical change, but it would also offer the state the time to consult the European Commission as regards the split VAT payment system, thus avoiding a possible infringement’ Daniel Anghel said.
The source of the lack of enthusiasm of the companies as regards the new VAT system does not seem to be cost generated by the chance, shows the PwC study. Moreover than 55.7% of the participants estimate they will implementation costs of up to 100,000 euro, 33% see these costs between 100,000 and 500,000 euro and 10.3% expect a financial impact between 500,000 and 1 million euro.
Only a very reduced percentage of 1% estimate costs of over 1 million euro.
‘As regards the costs, it would be necessary to talk about a underestimation of the financial impact of adaptation of the informatics systems and the processes in the companies to go to the new system of split payment of VAT. Moreover, it is possible that the interviewees do not appreciate exactly the issues of cashflow which the new system will generate’ Daniel Anghel said.