New instrument for monitoring prices and combating tax avoidance

The Government at its latest meeting introduced a new mechanism enabling inspection authorities to monitor prices along the entire value chain of the imported goods on the internal market and also to combat tax avoidance, Info-Prim Neo reports. Deputy Economy Minister Octavian Calmyc said the intention is to reduce the disparity between the customs value of the imported goods, in particular basic goods, and the price at which they are sold to the final consumer. Calmyc said a similar mechanism adopted by the Government on 3 August 2007, some elements of which have been borrowed for the new one, failed to detect any illicit transaction or case of large-scale tax avoidance at the customs during more than two years. The new mechanism provides for the establishment of an Analytical Center which will coordinate the activity of all the relevant governmental agencies and facilitate the information exchange between them. A reporting system will be introduced as well. “In this way, the Customs Service, based on well defined criteria, will report weekly, or on request, about the transactions involving imported goods that are under monitoring, to the Main Tax Inspectorate, the Center for Combating Economic Crimes and Corruption, and the Commission established for this purpose”, Calmyc explained. There are two risk criteria that will be used by the Customs Service in the clearance process in order to identify suspect import transactions and report them. The first criterion states that the customs value of the imported goods should be no smaller than 40 percent of the average prices of that goods on the market, as computed by the Commission together with the Ministry of Food Industry, the National Statistics Bureau and other relevant agencies. The second criterion applies to cases where the share of the importer of a particular good exceeds 35 percent of the total imports of that good in the previous year. The Main Tax Inspectorate and the Center for Economic Crimes will analyze the information provided by the Customs Service and will monitor the value chain of imported goods on the internal market, from importer to final consumer, will take the necessary measures to combat abuses and will inform the Commission, whose role is to ensure the enforcement of the mechanism. During debates on the topic at the Government's meeting, there were opinions, and at times heated arguments, on the potential responsibilities and authority of the Commission and its members. A highlight during the debates was the list of the goods subject to potential monitoring. The initial list consists of 35 items, including meat, flour, sugar, milk and dairy products, potatoes, tomatoes and other vegetables, edible oils, fresh and canned fish. An opinion was that the list should also include children's wear and other basic goods, including the so-called socially-sensitive goods. Asked when the population will feel the impact of the new mechanism, i.e. when the exaggerated prices will get lower, Prime Minister Vlad Filat said it was early to define time limits. “We want all the companies to respect the law, regardless of the business they are engaged in or their dimensions. When tax avoidance is eliminated, revenues to the budget will increase, enhancing the possibility to raise salaries, implement the social projects planned”, said Filat.