15.08.2012

"The reverse charge of VAT is a mecahism against tax fraud beneficial both for taxpayers and for the budget. It is one of the most efficient measures to combat tax fraud. Upright economic operators may only expect benefits from this mechanism", said Lyudmila Petkova, Director of the MoF Tax Policy Directorate, in an interview for Focus Radio program "Finansi na focus" (Focus on Finance).

In the interview Lyudmila Petkova explains the mecahism of VAT reverse charge which differs from the generally applied charging of VAT. "Generally, when a supplier is a taxable person, on supply the supplier charges the VAT, issues a tax invoice, the customer pays the VAT and exercises the right to deduct VAT respectively. When we have reverse charge the supplier writes in the invoice the grounds for not charging VAT, i.e. the reverse charge. The customer is the taxable person. He charges the tax by a protocol, enters the tax in the purchase day book and exercises the right to deduct and enters the deduction in the sale day book respectively", the expert explained.

Lyudmila Petkova further explained that the introduction of the reverse charge mecahism would be a fact after the Council of the EU issued a decision for derogation and subsequent amendments to the VAT Law. "Upon the issuance of the decision we are ready to amend the provisions and to table the amendments for adoption by the National Assembly in order for them to enter into force", she added.