EY Romania survey: Lacking legal framework – the main challenge faced by the Romanian taxpayers in fulfilling their Environment Fund duties


Identifying all tax liabilities towards the Environment Fund Administration (AFM) continues to constitute a major challenge among companies, although the requirements for such taxes and payments have been effective since 2005, according to an EY Romania survey conducted in June 2019.

The purpose of the survey was to measure the impact of the latest legislative changes on the Romanian business environment, with a special focus on the taxes and payments due to the Environment Fund and the taxpayers’ expectations of their relationships with the competent authorities.

97 per cent of the respondents say that today’s legal framework on the payments to the Environment Fund is neither clear, nor consistent with the economic realities. When asked about the main challenges they face in fulfilling their legal obligations related to taxes and payments to AFM, the respondents cited the lacking legal framework, but also their relationships with the competent authorities, which fail to provide concrete information and only make reference to sections of the laws when providing answers to taxpayers’ queries.

Regarding the payment of RON 2/kg of packaging placed on the domestic market, 54% of the respondents say that packaging quantities are determined based on documentary estimates (by computing the difference between gross and net weights, based on CMRs, etc.). Only 22 per cent calculate this payment based on the packaging weighing reports, which is the recommended method, as this is one of the safest computing methods.

When asked if they were sure that they have identified all liabilities towards AFM arising from their business, only 51 per cent of the respondents answered affirmatively. Furthermore, only 16 per cent of the respondents believe that a tax audit by the Environment Fund Administration would not result in additional payments.

The EY Romania survey also found that, under the current circumstances, the automation of the processes for determining the taxes due to the Environment Fund is a must. As such, 82 per cent of the respondents believe that using computer software would help them manage the packaging issue more efficiently.

The importance of automating these processes was indicated by the fact that determining the payments is a time- and resource-consuming task, while identifying the base for such calculations may involve multiple departments, as well as having technical, legal or fiscal data and information. “The challenges cited by our clients are the same from one year to another. This survey confirms the fact that most of the companies are not ready for a tax audit on the payments due to the Environment Fund. The frequent legislative changes constitute a constant challenge for the business environment, and identifying ways to automate and implement procedures for data flows should be a priority for taxpayers,” says Laura Ciobanu, Manager, Environmental Advisory & Compliance, EY Romania.

According to the survey, 31 per cent of the respondents currently use some form of automation in the process of determining, computing and stating their liabilities. Among these, 52% use Excel spreadsheets, 19% operate independently developed software dedicated exclusively to computing packaging quantities, and 29% use software integrated in their management systems.


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