miercuri, 6 aprilie 2011

Dissertation of master audit class - chapter 2 in english

În filmul ”Prince & Me 3: A Royal Honeymoon” actorul Cristopher Geere seamănă cu o prietenă din copilărie Ștefania, Și în poza din mijloc actorul seamănă cu îndrumătorul meu de la teza de masterat pe nume  Radu Gabriel

Din teza mea de masterat în engleză;
2.1 Concerns of the European Union creation of the Single Market and tax harmonization

As Romania transits toward a market economy and further integration into the European Union it is increasingly more relevant for our country to allign to the European norms and principles, towards ideals of development and a better qualify of life for all its members.
There are new concepts and priorities involved in the economic development of our country.
The first objective , written in the Roma Treaty (1957) was the creation of a common market, envisaged without any barriers to the free circulation of goods, services, capital and work force. It was planned for this objective to come into being gradually, in very different stages by 1969.
The Single market is considered to be an advancement because:
1. - as there are no barriers to economic exchanges (customs taxes, non-tariff restrictions), it will be in their interest for producers to produce cheap and good quality goods. What is the most productive for their individual countries, (with their specialisms), will determine an
increase of work productivity;
2. - as the market is being extended and more unitary, this in turn will enhance competition, by attraction an increased number of both producers and consumers; the direct result is that the public wil benefit from a wider range of goods at lower prices. In cases such as that of our country - where there is a a narrow market situation. With the competition sluggish, the prices are generally higher and there are even monopoly prices, which negatively affect the quality of life of population at large;
3. - it is advantageous for both producers and consumers, because it allows for mass production which pushes the production costs down and therefore prices, too;
4. – the single market will determine a new re-distribution of the invested capital and , more importantly, an optimization of the capital invested within the community.
5. - having a free movement of capital means a more useful and rational usage of the workforce, because the movement of capital is accompanied by a free movement of work force. This will help homogenize the employment across the countries, thus reducing the existing gaps amongst the union member states; and will ensure the salaries are
maintained at a reasonable rate.
In conclusion, the single market sharpens the competition, liberalizes the market, the circulation of capital and workforce, puts pressure on cost and price reduction, and ultimately maintains a high quality of life. The exchange of activities between human beings represents a principle which unifies human societies, and represents a progressive factor, of cohesion between peoples. The evolution of economic life shows that the economic activity is more efficient when societies are united, than when they are divided, and that the all unifying factor is the single market. Creating a single market will eliminate the fiscal problems encountered by individuals and companies, those obstacles specific of trans-border fiscality.
Because the international commercial exchanges have increased substantially it seems appropriate to harmonize the fiscal

Tax harmonization – the creation of a unitary fiscal system – indispensable in a competition, based on principles of loyalty, even more so when similar regimes (system) of assessment will have beneficial effects on prices and on the clashes which could follow from making choices about locations for the production activities, and for selling. Doing business in euro only will do away with the currency speculation which arise from different currencies in both time and space. The aim of the fiscal harmonization is to remove the large differences which exist between various tax methods and thus to minimize their effects. At present within the European Union there are 27 fiscal systems afferent to each member-state, with important differences (in 15 states) ,in accord to the fiscal policy of each state.

2.2. Brussels, 23 May 2001 - strategies concering coordonating fiscal policies
The European Commission has presented an important strategy regarding taxation policy in EU. The fiscal policy of EU has to support the greater objectives, such as:
- the main objective – to make the EU economy the most competitive and dynamic in the world, based on knowledge (established at the European Council Meeting in March 2000 and confirmed at the meeting in Stockholm). Increased tax coordination can help Member States to meet these objectives.
This means that efforts must be made to achieve a durable reduction in the overall tax burden in the EU, by ensuring a balance between cutting taxes, investing in public services and sustaining fiscal consolidation
- economic objectives – related to employment, the heath and safety of consumer, and also innovation objectives, environment and energy objectives
The tax system has to allow both individuals and companies to make the most of the internal market.
This implies a need to focus
- on eliminating the inefficiencies due to the co-existence of 15 different tax systems within the EU, and
- on making those tax systems simpler and more comprehensible to taxpayers.)
The Commission intends to solve these fiscal problems, thus being more proactive in relation to fiscal law breaking, by taking legal measures if the member states do not respect the fiscal norms or their practices run against the Treaty. In order to create a single market, we do not envisage ,, abolishing the national borders of the states, but the enlargement of a community of interests across the integrated territory,, For this, it is necessary for the countries to organize themselves, by implementing their measures of economic development, as I have pointed out.
- specific objectives - related to taxation practices for individuals and companies operate within the same single market. The main objectives are in terms of company taxation, taxation of pensions, tax registration - the Community's environmental objectives, excise duties on alcohol and tobacco use, value added tax.
As regards companies charge the Commission will present a study on differences in effective corporate taxation in the Community and remaining tax obstacles which prevent
companies from fully benefiting from the Internal Market. At present, companies engaged in cross-border activities can face problems such as discriminatory tax rules, double taxation, excessive administrative costs owing to complication administrative procedures and delays in
tax refunds.
Whatever solution is pursued, it is clear that the removal of tax obstacles would contribute substantially to improving the competitiveness of EU business
Fiscal co-ordination can be realized through fiscal harmonization and through the creation of a single market where the obstacles to free circulation of goods is being removed. The Commission supports that each country chooses its own taxation method, appropriate to their individual fiscal policy with the condition that they respect the norms of the community. Therefore all companies need to refer to their own monetary national laws – as governments are responsible for taxation. The main purpose of national tax systems is to provide an adequate level of revenue to finance public expenditure

2.3.1 Comparisons with the EU countries
in regards to direct and indirect taxes

When EU co ordinates the fiscal policies in relation to taxation, they have to take into account the nature of these taxes:
- direct tax – member states are normally free to choose own taxation system nationally sustainable, as long as they respect some basic principles,
- the elimination of discrimination and double taxation
- the prevention of abuses and non taxation through negligence
- the reducing the costs of conformation deriving from implementing a few taxation systems at the same time
Through its more recent initiatives, the Commission promotes a better co –ordination of direct tax systems of the member states in order to do away with fiscal barriers, which seem to impede the good working of the single market. Ideally they should be compatible not only with the community legislation but also amongst each other. Very few legislation acts have been adopted in regards to direct taxation, mainly because in such cases they prefer unanimous voting.
In December 2006 took place, also in Brussels, the European Commission's communication to the Council, the European Parliament and the Economic and Social Committee in the coordination of Member States in the direct tax systems, which says:
the aim of co-ordination is not to replace existing national tax systems by a uniform Community system but to ensure that such national systems can be made to work seamlessly together.
The lack of co-ordination between direct tax systems may also lead to unintended non-taxation or abuse and, hence, erosion of tax revenues

Personal income tax

Regarding ,,the fiscal policy in European Union – priorities for the following years,, of 23rd of May 2001, the European Commission stated that as some directives of harmonization are lacking, the tax on personal income is left to the member states to consider, according to their fiscal policies, as a national matter. They still have to follow the fundamental principles of the European Community Treaty in regards to free circulation of goods, services, capital and persons (migrating workforce and the freedom to take residence)(According to Art.39,43, 49,56). They need the co ordination by the Commission in order to avoid double taxation, or lack of it in trans-border situations. Generally speaking there shouldn’t t be direct discrimination or indirect on account of nationality, neither should there be restrictions on the four liberties. The measures taken are to do away with the fiscal obstacles on the home market. The Treaty stipulates that each citizen has the right to move freely and take residence on the territory of the member state (Article 18).

The tax on income is taking place in some countries such as Netherlands, France, Germany, Italy, Poland, UK, Spain, Sweden and Hungary - according to increments of income and differentiated quotas as they also used to exist in Romania (1996), the only difference was that in Romania there were 14 increments, and the countries mentioned above there were a maximum of 5, such as in Italy (see annex). The contribution of the middle earners amongst the member states is of 34,7%, and those honored by the employers is of 35.6% of their gross salary in comparison with 31,55% and 26,45% for our country. Bulgaria has the lowest rate of 10%, and it is the only one. For salaries of up to 17,579 euro Netherlands has a rate of 41,85%, whilst in France the highest rate is 30% for salaries of over 24, 872 euro. In Italy for a salary higher than 15,001 euro the rate is 27%. And Spain implements the same rate (27.13) for salaries over 53.407 euro. Germany differentiates further according to family situation in 4 groups. Sweden has only two rates, 20% for salaries over 328,800 Swedish crowns and 25% for salaries over 495,000. Sweden has refused adopting the single European currency, the Euro, encouraging the other member state to do the same in order ,,to maintain order in the state finances,,. At present the countries which are in agreement of the euro are Austria, Belgium, Cyprus, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Holland, Portugal, Slovakia and Spain - these countries are in the „euro zone”. Switzerland is not a member country of the European Union.

Pension tax

Strategies need to be implemented in order to prevent the intimidation of persons who want to resort to systems of pensions outside their country. The various norms in respect to taxation on pension will be monitored, and measures will be taken to ensure they correspond with the directives of the Treaty (the four liberties) and sanctioning the countries which do not follow them.
Generally speaking the fiscal norms included in these agreements need to be within the limits
established by the EU Treaty, the same as any other national laws, in order to avoid double implementation.

Corporate income tax

Our country has one of the lowest tax rates on corporate income amongst the European states and for this reason, the state capital is low. In 2005 Romania had the lowest level of income derived from corporate tax when compared to the other member states. Romania has the corporate income tax rate of 16%, but it is not the lowest, the lowest taxes are practiced in Bulgaria with 10 % and Germany with 15%, and Hungary 16%.
At the other end, the highest rates are in France, with 33.33%, Spain with 32.5 and UK with 30%, Sweden 28% and Switzerland 25.5%, with UK having a rate of 50% for oil derived products.

- indirect tax – requires a higher degree of harmonization because they can give rise to some obstacles to the free circulation of goods and availability of services on the home market. In order for the single market to run smoothly, EU has competencies in regards to the harmonization of legislation regarding the indirect taxation, inclusive of the fundamentals and the rates of taxation. Amongst the first measures of fiscal harmonization at European level have been taken in the area of indirect taxation.

The European Union has harmonized the VAT. There is a certain amount of flexibility on VAT rates, so account can be taken of specific national circumstances. Commonalities have been a common trim for the whole community and a series of common rules have established.
There are three new strategic proposals, by the Commission, to simplify, modernize and implement uniformly the tax, such as:
- introducing a minimum level for the standard VAT of 15%, and a reduced rate of 5%,
- experimentally introducing a reduced tax value, on some products and its monitoring,
- VAT introduced for the services provided by electronic means, which will help reduce fraud,
- reducing bureaucratic paperwork for the business across Europe by perfecting a simple and modern methodology, such as introducing:
o electronic receipts for the purpose of VAT, which aims to control the movement of goods amongst the member statess (electronic system VIES)
o the VAT code – is given for the registration for VAT and has the prefix RO. Persons who are VAT registered need to communicate the code to all the supplies, the service industry and other clients, every time a transaction of goods is made within the community, to the fiscal representative, clients and suppliers such as the person who is liable to pay tax but who does not reside permanently in Romania.
o review declaration – the deliveries and acquisitions within the community will be summed up in a review declaration which has to be handed in trimestrially by the VAT – registered firms.
o keeping the logs for sales and the logs for buying separate is more efficient
o the fiscal receipt will be replaced by a different document, named invoice, wihch needs to contain a minimum number of pieces of information. Signing it and stamping it is not compulsory.

Among the 18 member states there are different VAT quotes, for example its value being lower for drugs and medication, food and educational services. In some states, there is no VAT on exports. The standard rates are, generally speaking, around the value of 19%, like in Romania, and the highest rate is in Sweden with 25%, and the lowest in Spain with 16%.

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