Romania’s Tax Evasion Decree Published In Official Journal, Enters Force

The Government approved the decree Wednesday and teh act was published in the Official Journal within hours.

People close to the matter told MEDIAFAX the Government decided to drop plans to apply VAT on intra-EU trade and reintroduce excises on luxury items after the European Commission warned the measures breach EU rules and threatened infringement. The emergency decree keeps the plan to set up a „Registry of intra-community agents” as of August 1.

The Government had endorsed the decree end-May, but the act had not yet been published in the country’s Official Journal and authorities took the opportunity to eliminate certain provisions that would have breached EU legislation, people close to the talks told MEDIAFAX.

„It has also been decided to lower the list of products to be applied reverse taxation,” they said.

The initial decree stated that VAT would be perceived for trade with cereal, fruit, vegetables, meat, fish, flowers and construction materials within the European Union. It also reintroduced excises on luxury items.

The European Commission told MEDIAFAX two weeks ago the decree „raises a number of concerns with respect to its compliance with EU tax and excise legislation” and the Romanian Government had allowed the Commission a very short span of time for comments on the decree and had not taken the Commission’s remarks into account.

Romania’s Finance Minister Sebastian Vladescu admitted at the time the decree breached EU legislation, but said authorities were determined to go ahead with it and hope to get the Commission to lift infringement before it enforces penalties on the country.