VAT on sugar products and excise duty on soft drinks will cause headaches for both ANAF inspectors and companies. As the new tax law (296/2023) is written, it remains to be seen how the inspector will decide how much sugar is in a cookie or lemonade.

*From January 1, 2024, the tax legislation provides for VAT taxation at the rate of 19% for food products with added sugar, the total sugar content of which is at least 10 g/100 g of product. Now 9%.

“What will happen to baked goods and confectionery at the level of thousands of economic agents?” asks Georgiana Iancu, Head of Indirect Taxes at EY Romania.

• “If I have an apple pie, which I sweeten with concentrated apple juice, and at the end of the day the concentration exceeds 10 grams, then we already go to 19% VAT from 9%”

“It will also be very difficult for economic agents to understand these rules and apply them. It will also be very difficult for ANAF to identify those situations in which the VAT rate was applied incorrectly,” she says.

• “I think we’re going to have problems because of the benefits we have in the Tax Code”

What VAT rate will cupcakes and cookies have?

“We have an exception for kozonak and cookies. Regardless of the sugar content, we adhere to 9% VAT,” she says.

What distortions occur in practice?

“We have kozonak producers all over the country, but not only. We also have Panettone. There is also a Bulgarian kozonak, similar to ours. What are we going to do with them? What VAT rate will we apply?”, she asks.

According to her, in the tariff classification codes, we do not have the product kozonak as such.

As for cookies, they are simple, by the way, we also have eugenics.

So it is very difficult for companies to know which VAT rate to apply: from 9% to 19%?

Is lemonade with sugar or honey in a restaurant a taxable product?

The tax law also introduces an excise tax on drinks with sugar and various sweeteners.

* Added sugar means cane sugar, brown sugar, crystalline sucrose, invert sugar, dextrose, molasses, honey sugar, molasses and syrups such as malt syrup, fruit syrup, rice malt syrup, corn, high fructose corn syrup, maple syrup , glucose syrup. , glucose-fructose, fructose, sucrose, glucose, lactose, hydrolyzed lactose and galactose, added as ingredients, sugars in nectars such as coconut flower nectar, date nectar, agave nectar, unsweetened fruit juice sugars, fruit juice concentrate, sugars from fruit purees and jam.

“Lemonade with sugar or honey is considered to contain sugar. Sugar in honey…that’s a technical discussion. I can’t tell you with a tax advisor hat what the legislator meant by sugar. I should do some research to be able to give an answer that I feel comfortable with,” said the representative of EY Romania.

• “I can think of many entrepreneurs who will be inspired by what they find in the literature and on specialized websites on the Internet”

“Restaurants, if they sell lemonade, will have to submit a special declaration,” she said.

It remains to be seen how ANAF will know how much sugar is in lemonade.

fpto source:Dreamstime.com