Hocus Pocus with the registration in VAT purpose

During the same year, the Romanian Government publishes a new order by introducing a new procedure for registration in VAT purpose and then it abrogates. After the series of wrong measures followed by the abrogation of these measures (eg. dissolution and then reintroduction of microenterprises, introduction of flat-rates and then giving up at it, and so on) exactly when we are facing a new paradoxical situation: the publication of the Order 1984/2011, namely the abrogation of it by the Order 2795/2011.

By this summer, anyone who had registered a company, at the time of registration adhered for being payer or non-payer of VAT, namely for the VAT payment period (monthly or quarterly). A simple and natural procedure. Basically, with a single road, at the Trade Registry, the entrepreneur solves both problems, the legal registration and the fiscal registration, along with the company registration certificate and also receiving the tax identification number.

After one year ago, this procedure was alreadycomplicated and almost doubled by creating a new institution, the Register of Intercommunity Operators, an institution which is unnecessary, in my opinion, typical Romanian bureaucracy, in this summer the Romanian Government came up with a new, wrong measure and namely the Ordinance 1984 of May 2011 which introduced a new procedure for registration in VAT purposes.

The new procedure, not anchored in reality, has blocked the registration and operation of many companies, from its publication until now.

In other words, after the registration of the company, the entrepreneur must submit a new folder to ANAF to request the registration as VAT payer. The procedure was long and difficult, involving among others the control of the Financial Guard at the social office to see if the company and the necessary conditions for carrying on activities. Obviously, this does not usually have them, because only established from the legal point of view and not registered for VAT purposes could not perform any kind of purchases (being unable to deduct VAT on). Implicit there were no facilities at the social office, there were no contracts with the suppliers, customers and so on. Typical case for the fable with the egg and the chicken. I cannot enable because I do not have the VAT code, but I cannot receive the VAT code because I do not have the facilities to operate.

Moreover, at the visit of the Financial Guard representative (which of course could have taken place at any time) the company’s administrator must be present at the social office. Misunderstood is the fact of what the Financial Guard controlled, being the fact that the company had not started yet the work. This step was not understood by the Financial Guard representative, outraged that their time is filled with such activities in the context where the most important tasks were carried out. If the administrator was a foreign person, the situation was more complicated, this one must make an additional travel to Romania to discuss few minutes with the Guard representative … about nothing, obviously!

All the foreign investors who have gone through this new procedure were impressed and annoyed. It already diminishes their appetite to carry out businesses in Romania. The new procedure, combined with the extended practice Register of Intercommunity Operators within which a newly established company can operate in Romania by almost 2 months, resulting additional costs for them. In the context which was supposed to simplify bureaucracy and attract investors.

Private sector responded and criticized the measure, especially because it was not consulted in advance about the opportunity of such procedure. Finally, the same Government abrogates the 1974 Ordinance from May 2011 through the 2795 Ordinance from November 2011!

Therefore, with 1^st December 2011 they will return to the old procedure for registration! It took six months for the Romanian Government to understand and to rectify the committed error. Unfortunately no one has claimed the responsibility and no one was fired for this error.

A problem that remains unsolved is the fact that abrogation concerns only companies that will register after December 1^st, 2011. Therefore companies registered before December 1^st are still using the old procedure and are still waiting to receive control from the Financial Guard in order to get the approval to register for VAT purposes.

Meanwhile, the companies established in December will have to set up the VAT code (if requested at the registration of the company) and will begin to operate immediately.