As a result of these operative anti-fraud control initiatives, the National Administration of Fiscal Administration (NAFA) announced in the same month that they will perform an extensive audit of the largest companies based in Romania, in all areas of activity.
In its communication, the NAFA stated that the main object of Operation Iceberg is:
"Combatting profit externalisation, verifying the way in which large companies manage the economic relationship between companies in their group and dismantling transactional chains organised for the purpose of evading tax obligations by identifying and instrumenting tax fraud phenomena with significant negative implications on the state budget."
Following the risk evaluation, the NAFA noted that it has already initiated the tax audit at 80 taxpayers, with an estimated risk value of approximately €60 million ($67 million).
Transfer pricing adjustments
This comes as no surprise, as the regular practice of the DGAF during operative anti-fraud controls is to request transfer pricing (TP) documentation, even if the entitlement for requesting such documentation during an anti-fraud control is questioned.
Thus, it can be concluded that Operation Iceberg represents a mechanism by the tax authorities to perform significant TP adjustments.
Nevertheless, even if the recent tax audits are based on the risk evaluation resulting from anti-fraud operative controls, we can now expect the commencement of new tax audits that are based on the internal risk evaluation performed by specially designated tax inspectors from the NAFA.
Given the tendency of the NAFA to criminalise the failure of taxpayers to comply with Romanian tax legislation, Operation Iceberg will also "identify and instrument the phenomena of tax fraud".
It will also minimise the "significant negative implications on the state budget", because non-compliance with TP regulations usually translate into significant additional tax liabilities for the taxpayer.
It is expected that in the following months, the NAFA will increase tax audits to verify intra-group transactions because the tax authorities target is to verify a total of 487 large and medium-sized taxpayers in 2019.