“I think that a tax reform is crucial in Romania. It is difficult to predict how long it would last but it should be put in place by Romanian authorities and have the financial backing of the International Monetary Fund”, Daniel Anghel (photo), Partner, Indirect Tax, PricewaterhouseCoopers.

The reform should include a training, retraining and internship programme for the employees in the fiscal system. There is a shortage of human resources for tax inspector positions, for example, PwC Partner continued, adding that the theme and procedures of tax control must be changed.

“The state should not forget that tax collection process it is very important and it should be improved by providing incentives to taxpayers or by the increase of voluntary compliance rate or of taxable base”, said Daniel Anghel.

Moreover, if the fiscal policy didn’t pay off this year, and state revenues didn’t grow, meeting the budget gap target agreed with the International Monetary Fund would be at risk, and VAT would be raised in 2011.

“We may see a VAT raise in 2011, should the measures and programs put in place by the government this year fail to pay off and budget deficit fail to narrow. But as far as I am concerned, I don’t expect the consumption to pick up this year, especially with the rising unemployment rates. The economy is set to take a heavier loss this year”, PwC partner said.

The standard VAT is 19% and is levied on all commercial activities involving the production and distribution of goods and the provision of services.

Companies are facing massive delays in tax refund, a problem that could be addressed by using account receivable factoring, a procedure that should be requested by the taxpayer.

“If we take into account all the problems arising from tax refund, and that access to loans is tighter, it is clearly that we should see a muster of insolvencies on cash flow shortage”, said Anghel.

Daniel Anghel joined PricewaterhouseCoopers in 1997 and is now heading the Indirect Tax of PwC. He is specialized in VAT, customs and international trade. Daniel Anghel is also member of Indirect Tax workgroup of PwC for Central and Eastern Europe and member of the executive board of International Fiscal Association Romania. He has also worked for four years with PwC Netherlands, PwC Poland and PwC Hungary.