EU Rejects Romania’s Plans To Apply Reverse Taxation On Food

The European Commission has rejected reverse taxation in the food sector, which entails that transaction taxes will be paid by beneficiaries and not by entities that delivered the merchandise, said Thursday Aurel Popescu, head of Romania’s bread industry association Rompan.

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"(Finance Minister Sebastian) Vladescu told me we should talk about reverse taxation in the past tense, because Romania didn't get the European Commission's approval to introduce it," Popescu said during the Mediafax Talks about Romanian Agriculture conference.

He said the Government's inability to introduce reverse taxation clears the path for tax evasion and nearly legalizes it.

Popescu said bread sales have decreased 10% in the first part of July, after the value added tax was increased to 24% from 19%, and the decrease is expected to reach 15-20%.

Romania had requested derogation from EU regulations to apply temporarily, until the end of the year, reverse taxation on intra-community trade with cereals, fruit, vegetables, meat, sugar and bread and the Finance Ministry said the measure was to be applied within ten days after EC approval.

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