Last year, the tax authority (ANAF) carried out a greater number of unannounced tax audits focused on transfer pricing, a type of control that has become more and more frequent as of 2018. In 2020 we also expect the tax authority to check in particular certain categories of taxpayers based on the results of risk analysis performed.
From what we could observe during the previous year, the companies subjected to audits included those reporting recurring losses or those that had a large amount of VAT to recover from the state budget and did not receive regular reimbursements.
“The risk criteria and the methodology used to select the companies to be controlled are not yet transparent. As tax consultants, we can observe certain trends, but we cannot tell our clients with certainty whether and when they will be audited”, explains Sorana Cernea, Partner at TPA Romania and coordinator of the consultancy and audit company’s Cluj office.
Overall, there is no evidence to suggest that some areas of activity are more likely to be subject to unannounced inspections than others, although there can be noticed a higher frequency of controls among construction firms, which were checked especially with respect to the fiscal treatment of daily allowances for employees.
However, we are still able to identify certain categories of taxpayers as being at greater risk to be checked by the tax authority in 2020. Among these taxpayers, the following can be mentioned:
• companies that record losses, especially those that are part of a group and have transactions with affiliated parties;
• companies which have large cash balances or significant amounts granted as cash advances and which do not distribute dividends;
• companies that report large amounts of VAT to recover but which do not claim any refunds over a long period of time.
“Profitable companies, which pay their taxes on time, or those subject to repeated audits for VAT reimbursement and have not had significant amounts of VAT refused to be reimbursed, were not audited, thus allowing us to conclude that the tax authority performs risk analysis that it is taken into account when choosing the taxpayers to be checked”, Sorana Cernea concludes.
