Violation of the Competition Law that led to the reduction by almost 100 million MDL of the amount of taxes paid in the state budget, found by the Competition Council

On 25.05.2022, the Competition Council issued the decision, by which it found the violation of art. 12 of the Competition Law by the SE "Center of Applied Metrology and Certification" (successor of rights of the SE "National Institute of Standardization and Metrology"). The violation consisted in granting a privilege not provided by law to the undertakings ''JLC'' JSC, "Incomlac" JSC, "Lactis" JSC and "Factory of Butter in Floresti district" JSC by by misattributing tariff positions for dairy products with foreign fat content.

During the investigation, the Competition Council found that the "National Institute of Standardization and Metrology" had unfoundedly assigned to the undertakings "JLC" JSC, "Incomlac" JSC, "Lactis" JSC and "The Butter Factory in Floresti district" JSC the tariff headings 040390690 and 040610200 (which refer to some dairy products and fresh cheese) for cheese products and cream products containing foreign fats. As a result, these undertakings sold for about 8 years, until 2019, cheese products and cream products with foreign fats at the reduced VAT rate of 8% instead of 20%.

This has had the effect of creating discriminatory conditions of activity both for the other producers of cheese and cream products, with a foreign fat content - who placed those products on the market at the standard VAT rate of 20%, and for undertakings producing dairy products containing only lactic fats - which had higher costs linked to the purchase of lactic acid fats and, respectively, they either did not have the possibility to place dairy products on the market at a sufficient profitability, or dairy products were not competitive in price compared to dairy products containing foreign fats.

Also, the effects of the SE "National Institute of Standardization and Metrology" actions were reflected negatively on the state budget. The letters of the SE "National Institute of Standardization and Metrology" regarding the establishment of tariff positions served as grounds for the unfounded practice of the reduced VAT rate of 8% when placing on the market of cheese products and cream products with foreign fat content contrary to the provisions of art. 96 of the Fiscal Code. As a result, the amount of VAT collected from the value of cheese products and cream products containing foreign fats was 12% lower. In total, about 99 million MDL less was paid in the state budget than what would have been paid if the standard VAT rate of 20% was applied. In this regard, the Competition Council informed about its findings the State Tax Service, which will take further measures to verify the correctness of the payment of taxes by the concerned undertakings.

The romanian version of the decision of the Competition Council can be accessed in non-confidential form on the website of the institution: Decision of the Competition Council's Plenum No. APD -13/19-26 as of 25.05.2022