Our opinion on the changes of Article 118 of the VAT Law, promulgated in State Gazette No. 107/2014
Why the adopted amendments are meaningless and fiscally harmful to the business?
Due to surprising changes, departmental stations, serving for refueling for their own needs, shall be equipped with electronic fiscal memory, which includes level measuring system, fiscal device and is connected with the NRA in real time through a mobile connection. Practically, they must meet the same requirements that meet stations selling fuel. Changes were adopted quietly, without discussions.
As far as this measure is aimed at the reduction of illegal fuel sales and improving tax collection, it is unjustified and unnecessary. The arguments are the following:
- Until now, the procedure described in Art. 118 of the VAT Law required that every fuel in a departmental station has to be electronically declared through the Information System of Fuel Control (ISFC) on the NRA website on the date of the delivery. This declaration is double - the recipient is obliged to declare that he had received and the provider - that the fuel is supplied, independently of one another. We believe these commitments provide sufficient information to the NRA for fuel movement and the opportunity for additional control. Double declaration means mutual control and the submitted data contains all of the required information - provider, recipient, site of the departmental stations, type and quantity of fuel and a bunch of other information. We even think that the requirement for mandatory declaration on the delivery date is too burdensome. When deliveries are made on weekends or during non-working hours, both the supplier and the recipient engage staff to provide the information to the NRA, which leads to additional costs. Not to mention that fuel retailers’ declarations are hundreds per day and there are employees who specifically deal with it to serve the requirements of the Administration. According to the VAT Law, the provider may issue an invoice within 5 days after delivery, but at the same time has to declare it the same day !! However, the NRA has everything that is necessary to implement control on the movement of fuel and to examine the site at their discretion.
- The installation of an electronic fiscal memory with a level measuring system with a remote connection with the NRA provides only the submission of a large amount of information at more frequent intervals. This is not a mechanism for a remote inspection, it is a source of information on which the NRA may judge whether there is a likelihood of a breach. In order to establish a violation, a physical examination is required. According to the NRA, the information from these systems helps them to analyze the risk and to carry out more targeted and effective checks. In our opinion, after nearly 2 years of experience in the operation of petrol stations, the fiscal memories with level measuring systems are quite complicated mechanisms, which aggravate the work of stations. Therefore, because of their unnecessary complexity, they often generate and transmit inaccurate and inconsistent information, which can hardly be adequately structured and what is more, analyzed. Of course, we have no insight of the summarized information of the NRA but surely, the fiscal memory does not cancel the obligation of the authorities to carry out physical checks and in our opinion, it does not contribute much to its effectiveness. According to the emergently published by the Ministry of Finance draft amendment to Regulation N-18/2006., the NRA should examine all departmental stations within January 31, 2015. This implies that the Agency has sufficient resources to perform ongoing checks of all these objects, which renders the measure of obliging them to use fiscal memories with measuring systems.
- The introduction of fiscal memories with measuring systems in departmental stations will lead to substantial costs for the entities that manage them. These costs would be disproportionate, since the systems have mandatory components (fiscal device, level console), which must be present, no matter whether the system serves 1 or 6 tanks, and whether it contains 1000 or 100,000 l a month. In other words, the financial burden of the fuel unit will be significantly greater than in retail petrol stations. The smaller the user is, the more expensive the fuel will be. This will make the management of departmental stations of some users unprofitable, respectively this will force them to shift their consumption to petrol stations. In both cases, businesses will suffer harm, which would reduce their effectiveness. The smaller size, the more damages will suffer. The way of accepting the changes and the fact that actions for exercising control started on January 7, 2015, without ensuring proper execution time, give reasonable grounds to believe that the goal is not improving the results but to serve someone’s interests. Undoubtedly, winners from the changes will be retailers - petrol stations. The more stations that an entity owns, the more benefits it will gain. Losses will be bigger for farmers, transport and construction companies. By rough estimates, departmental stations are over 20,000, but the NRA probably has more accurate data. The affected are a number of the most important economic sectors.
Given the above circumstances, we believe that the changes in Article 118 of the VAT Law do not serve the public interest, are harmful to the business and work only in favor of certain narrow circles of people. Therefore they should be canceled and the recently working regime until 31.12.2014 should be reviewed and optimized.
Stoil Arnaudkin, CEO