Octavian Palade
According to the VAT legislation in force, the VAT paying companies must prove they have checked their suppliers’ risk potential in order to safeguard their VAT deduction right.
The fiscal authority has the right to refuse VAT deduction if the taxpayer “knew or should have known” that it has been involved in a fiscal fraud occurred in the supply chain of its purchases. The rule also applies to insufficiently cautious taxpayers which involuntarily took part in a tax fraud, but which is supposed to have had enough information to conclude that the transaction is part of a fraud.
“In case of examinations from the fiscal authority, taxpayers need to demonstrate that they have acted in good faith by having assessed their business partners’ potential risks, in order to be able to claim the right to deduct VAT expenses. Besides the fact that this assessment is time-consuming, companies often face the difficulty to prove their good faith. PartnerSCAN is a solution that automates the procedure for evaluating the fiscal risk of Romanian business partners,” said Raluca Baldea, Indirect Tax Director, Deloitte Romania.
"Companies need to access complete information about their business partners, in dynamic and easily understandable formats. Together with Deloitte Romania, we have developed PartnerSCAN application, which automates the way in which any company active on the Romanian market can perform and prove its fiscal responsibility and diligent practices. I greet the entrepreneurial spirit of Deloitte team, which decided to access our experience in business intelligence, an experience from which Romanian companies already benefit by having access to updated information in real time,” said Adrian Dragomir, CEO of Termene.ro.
PartnerSCAN app processes the state authorities’ public databases information provided by Termene.ro by using an algorithm designed by Deloitte specialists based on the European Union Court of Justice decisions and on their extensive practice. The algorithm assigns scores to 18 indicators relevant for assessing the fiscal risk, including partner inactivity, canceled VAT code, the risk of insolvency, debt to the state budget, number of employees, age of the company. Also, the application takes into account if shareholders or administrators hold similar positions in insolvent or liquidated companies, number of companies headquartered at the same address or how many times the registered office has changed over one year.
PartnerSCAN users fill in the identification data of the business partners to be assessed and receive a report generated by the application that includes the risk profile of each of them. The report also provides explanations based on the level of risk generated by a specific indicator and general recommendations for mitigating the risks. The results generated by PartnerSCAN are to be discussed by the users with Deloitte specialists for complete explanations and in order to establish together the best course of action for the future.
The solution brings multiple benefits for the user, as it can be utilized as a proof of diligence in verifying the business partners in Romania, which is an important element in determining the VAT and corporate income tax treatment. Therefore, the application is a facilitator in deciding whether a company will enter or not in a business relationship with a supplier. It can also serve as a prevention tool for users, to ensure that they are not involved in a tax fraud.
Termene.ro is a company established in 2014 with the purpose to help companies identify business opportunities and assess the business risks, by providing access to an intuitive and user-friendly platform. More than 50,000 companies use daily the platform to obtain information updated in real time on Romanian companies’ financial and legal data.
Deloitte provides worldwide audit, consulting, legal, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500 companies through a globally connected network of member firms in more than 150 countries and territories, bringing world-class capabilities, insights, and high-quality service to address clients' most complex business challenges. Deloitte's goal is to make an impact that matters through its more than 312,000 professionals.
Deloitte Romania is one of the leading professional services organizations in the country providing, in cooperation with Reff & Associates, services in audit, tax, legal, consulting, financial advisory, risk advisory, business processes as well as technology services and other related services, through more than 1,700 professionals.
