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PM Tudose on split VAT: Optional for starters, mandatory after Jan.1 2018


Prime Minister Mihai Tudose has announced that the split Value-Added Tax (VAT) will be optional for a time, but from January 1, 2018 it will become mandatory.

"It will be optional in the first stage, as far as I understand from the finance minister. You can do this or not, but from January 1, it will be mandatory because everybody wants everything from the government, but when the government erects some fences things only get easier (...) Firefighter costs, ambulances cost, hospitals cost. All this is unsustainable if supported by the income tax only. (...) Let's stay within normalcy limits. There is no alternative, because I do not know when someone may take the money and run. I cannot guard 100,000 business operators," Tudose told Romania TV private broadcaster on Wednesday.

He explained that companies that do not currently pay VAT can no longer continue the same practice, but "75 percent of the payers are all right."

"Because when you get the VAT, it does not go into your pocket, it goes into the government's tap," said Tudose.

He explained that VAT has two components and that, at present, some companies are going bankrupt after not paying VAT for a time.

"When you go buy a package of biscuits, you see the shelf price at the counter with two components: the price for the biscuits and the VAT, which is what Romanians pay the government (...), it is what used to be a tax on the movement of goods. Today, we are talking about Romania — 25 percent of the money that the citizens have to pay for the goods and that has to come to the government, is leaving or going away, disappearing. How? By various methods: some do not pay at all and pray not to get caught, others, with more or less imagination, after collecting some money that they do not pay to the government, declare their companies bankrupt," added Tudose.