January 2012

Dear readers, we propose you to get acquainted with the legislative news published in the Official Monitor of the Republic of Moldova during January, 2012.

Entrepreneurship
Tax legislation
Bănci şi activitate bancară
Reglementări din diverse domenii

Entrepreneurship

1. Law on entrepreneurship and enterprises No. 845-XII of January 3, 1992 was amended and completed. The provisions of this law were completed with regulations that have been excluded from the Tax Code regarding installation, exploitation of POS terminal and establishment of penalties for incompletely drawn up tax invoices for delivery of socially important goods. Also it was modified the mechanism for calculating the fine for unlicensed activity or prohibited activities on the territory of the Republic of Moldova, as well as of those allowed exclusively to state enterprises, the fine these violations constituting the size of gross income derived from the performed activity. (Law No. 267 as of December 23, 2011, Official Monitor of the Republic of Moldova No. 13-14 as of January 13, 2012).

2. Law on state registration of legal entities and individual entrepreneurs No.220-XVI as of October 19, 2007 was amended. The completions made specify that registration of insurance companies, non-state pension funds, savings and loans associations and their subsidiaries requires the opinion of the National Commission of Financial Market. There are also set some other situations when the opinion or decision of the National Commission of Financial Market is mandatory. Law No. 261 as of December 19, 2011, Official Monitor of the Republic of Moldova No. 21-24 of January 27, 2012).

3. Changes and additions were made in the Law on limited liability companies No.135-XVI as of June 14, 2007. The given modifications refer to the replacement of the word “benefit” in the entire law with the words “net profit” where necessary. Resulting from this change, dividends will be only paid from net profit, which can be made only at the end of the administration period, after its determination. (Law No. 267 of December 23, 2011, Official Monitor of the Republic of Moldova issued on January 13-14, 2012).

4. The Contravention Code of the Republic of Moldova No. 218-XVI as of October 24, 2008 was completed with two new offences: illegal transportation of passengers (art. 1971 and Prevention of activity in post-clearance audit (art. 2871). (Law No. 267 as of December 23, 2011, Official Monitor of the Republic of Moldova No.13-14 of January 13, 2012).

5. The Regulation on the manner of approving and registering producer prices for medicines approved by the Government Decision No. 525 of June 22, 2010 was amended and supplemented. In result, it was modified the method of approving producer prices for medicines by the Ministry of Health, as well as the procedure used for their approval and registration in the National Catalogue of Producer Prices for Medicines. (Government Decision No. 32 as of January 13, 2012, Official Monitor of the Republic of Moldova No. 16-18 of January 20, 2012).

Tax legislation

1. Changes and additions were made in the Tax Code No. 1163-XIII of April 24, 1997 (republished in the Official Monitor of the Republic of Moldova, special edition of February 8, 2007):

one of the most important changes is the change of income tax rates (Article 15), namely – reintroduction of the income tax for economic operators (replacement of tax rate of 0% with 12%); establishment of income tax rate of 7% of taxable income for farms and equalization of individual entrepreneurs in terms of taxation with natural persons that have no business activity (7% of annual taxable income that does not exceed MDL 25 200 and 18% of annual taxable income that exceeds MDL 25 200);

there was repealed the provision according to which incomes obtained by individuals citizens of the Republic of Moldova from alienation of agricultural land are considered taxable (Article 20 lettero1);

it was also amended the regime of taxation of gains from promotional campaigns. Starting with 2012, all the gains obtained in result of promotional campaigns are to be taxed at the source of payment with 10%, regardless of the amount of this gain (Article 901 paragraph 1);

starting with this year, it was allowed the deduction of ordinary and necessary expenditures borne by the taxpayer during the taxable year, documentary unconfirmed, in the amount of 0,2% of taxable income (before this deduction constituted 0,1%, according to Government Decision No. 485 of 05.04.1998 (Article 24, paragraph 10) on the manner to and amount of deduction of expenditures documentary unconfirmed by the taxpayer;

the was excluded the provision according to which it is not allowed deduction of amounts paid to purchase land (Article 24 (5)). Thus, if the economic agent buys land, its purchase amounts will be allowed for deduction on general principles;

the property that the taxpayer will have the right to calculate depreciation is the material property reflected in the taxpayer’s balance sheet in accordance with the law and used in entrepreneurial activity, the value of which decreases presumably due to physical and moral wear and whose period of operation is more than a year and its value exceeds the amount of MDL 6000 (Article 26, paragraph 2);

to ensure progression of wear norms for tax purposes, it is proposed to increase the norms of wear and tear from 10% to 12,5% of properties of third category. (Article 26, paragraph 8);

starting with this year, the taxpayer will be entitled to report the amount of losses in result of its entrepreneurial activity not for the next five years, as it was before, but for the next three years. (Article 32, paragraph 1);

the amount of annual personal exemption was increased from MDL 8100 to MDL 8640, of major personal exemption from MDL 12 000 to MDL 12 840 and the exemption for maintained persons from MDL 1800 to MDL 1920. (Articles 33 and 35);

changes were made in tax regime of noncommercial organizations, tax reduction procedure being simplified (Article 52). Thus, organizations that wish to benefit from the provisions of Article 52 of the Tax Code will not be required to obtain public utility status, the right to exemption of income tax being achieved by an application submitted by the noncommercial organization to the territorial body of the State Tax Service. If it is found that the noncommercial organization does not comply with the provisions of the given article, it will be subject to the generally established taxation;

Title II of the Tax Code was completed with a new chapter 71 Taxation of economic agents subject to the small and medium enterprises (Article 541 – Article 544). According to the given chapter, economic agents that are not registered as VAT payers (except for households and individual entrepreneurs) and the annual turnover of which is up to MDL 100 000, are to apply the taxation regime established by this chapter – tax rate of 3% of the object of taxation. Economic agents that are not registered as VAT payers (except for households and individual entrepreneurs) and the annual turnover of which is from MDL 100 000 to MDL 600 000, can choose the tax regime provided by the given chapter or the generally established method of taxation;

due to the introduction of income tax, there appeared the obligation of its payment in installments, thus being determined that in 2012 taxpayers that get other income than from employment or who are not applied withholding of tax on interest and royalties income, are obliged to pay, no later than March 31, June 30, September 30, and December 31 of the fiscal year, amounts equal to ¼ of the amount calculated as tax to be paid for that year (Article 84);

it was increased from 5% to 7% the income tax rate to be withheld at the source of payment of natural persons that do not practice entrepreneurial activity, on certain incomes received by them (Article 90). At the same time, it was cancelled the obligation to withhold income tax from payments paid to taxpayers for some services such as rent, advertising, audit, management and marketing, etc.;

it was modified the income tax rate to be withhold from payments paid to non-residents to equalize them to the rates provided for local economic agents (Article 91);

it was established that supply of goods and services provided free of charge for advertising and/or sales promotion in annual amount of 0,2% (previously 0.1%) of sales income obtain during the year preceding the year, in which the delivery is made, is not VAT taxable (Article 95 paragraph 3);

it was concretized the VAT base for personal use or consumption of goods imported by individuals. Thus, if the customs value of imported goods will exceed the nontaxable limit of 200 euro, VAT of the full value of the property will be paid, not only of the value exceeding the nontaxable limit, as it was before (Article 101 paragraph 7);

there were excluded from the category of VAT exempted services personnel professional training services (Article 101, paragraph 5) and the property of companies declared in process of bankruptcy (Article 101, paragraph 8);

it was expressly established that the amount of VAT to be paid on the value that was not subject to wear and tear, of discarded fixed assets, does not pass to the account and relates to the expenses of the period. (Article 102, paragraph 4)

it was established the general electronic register of invoices (Article 93, point 19, 1181,). This is a registry established and administrated by the Main State Tax Inspectorate in which suppliers will register invoices during the day they were issued, if the total taxable value of the VAT taxable supply exceeds the amount of:

a) MDL 100.000 – from July 1, 2012, by VAT subjects that are served by the Main State Tax Inspectorate of Balti municipality and Comrat Tax Management Department of the State Tax Inspectorate of the Autonomous Territorial Unit of Gagauzia.

b) MDL 50.000 – starting with January 1, 2013, by all VAT subjects;

c) MDL 10.00 – starting with January 1, 2014, by all VAT subjects.

it was specified the excise calculation base when customs value of goods imported by individuals exceeds the tax-free limit of 200 euro (Article 124, paragraph 1);

for the development of wine industry it was cancelled the excise on wine of fresh grapes and grape must. Also, it was canceled the excise on crystal articles. At the same time, the excise on alcoholic beverages, tobacco products, etc. was increased. (Annex to Title IV);

it was established that the outstanding amount of tax liability up to ML 100 is not considered debt to the national public budget to a) benefit from reduction of fine for tax violations, b) failure to present and or/ cancellation of the provision to suspend the operations of the taxpayer’s bank account; c) attestations for lack of debts to the national public budget of economic entities (Article 129, paragraph 13);

it was excluded the provision according to which the corrected tax report cannot be presented later than the date set for submission of report for the following fiscal period. This change will allow the taxpayer to submit the corrected tax report for any period until the announcement and/or conduct of fiscal control. (Article 188);

Title V of the Tax Code was supplemented by Chapter 111 “Indirect methods for estimating taxable income of individuals”. Under this chapter, objects of indirect estimation methods will be income received by individuals starting with January 1, 2012;

there were modified the penalties for tax violations, in terms of tightening their meaning (for not using cash and control machines, for failure to preserve accounting documents, for not issuing invoice in case of pledged goods, etc. (Chapter 15 of Title V). These and other amendment and additions to the Tax Code were published in the Official Monitor of the Republic of Moldova No. 13-14 of January, 2012. (Law No. 276 of December 23, 2011).

2. Changes and additions were made in the Law on the implementation of Titles I and II of the Tax Code No. 1164-XIII as of April 24, 1997 (republished in the Official Monitor of the Republic of Moldova, special edition of February 8, 2007). As a result of the modifications made, it was changed the tax regime of economic agents’ employees whose core activity is software development. (Law No. 267 of December 23, 2011, Official Monitor of the Republic of Moldova No.13-14 issued on January 13, 2012).

3. Also, in the Official Monitor of the Republic of Moldova No. 13-14 issued on January 12, 2012, there were published additions and changes in the following laws:

State Tax Law No. 1216-XII of December 3, 1992,

Law on customs tariff No.1380-XIII of November 20, 1997,

Law on the implementation of Title III of the Tax Code No. 1417-XIII of December 17, 1997, Law on the implementation of Title VI of the Tax Code No. 1056-XIV, Law on the implementation of Title V of the Tax Code No. 408-XV as of July 26, 2011 (republished in the Official Monitor of the Republic of Moldova, special edition of February 8, 2007)

Customs Code of the Republic of Moldova No. 1149-XIV of July 20, 2000 (republished in the Official Monitor of the Republic of Moldova, special edition of January 1, 2007);

Law on inserting and removing goods from the territory of the Republic of Moldova by natural persons No. 1569-XV of December 20, 2002 (Law No. 276 of December 23, 2011).

4. Law on state social insurance budget was published. According to this law, it was maintained the tariff of state social insurance contribution of 29%, of which 23% constitutes the part to be paid by the employer and 6% by the employee. Also, it was maintained the tariff of the state social insurance contribution in the amount of 22% for agriculture, 16% will be calculated from the mean of the employer and 6% will be subsidized from the state budget. State social insurance contribution for taxpayers working on their own (individual entrepreneurs, lawyers, notaries, bailiffs and mediators), for entrepreneur patent holders and citizens engaged on foreign contract was set in annual amount of MDL 4704. Calculation of state social insurance contributions by employers for social security of civil aviation employees, whose jobs fall under specific conditions, was maintained at the level of 33% of the salary fund and other rewards. Economic agents, whose main activity is software development, will calculate, withhold and pay mandatory state social insurance contributions in the general established amount (tariff).(Law No. 270 of December 23, 2011, Official Monitor of the Republic of Moldova No. 15 of January 17, 2012).

5. Also, Law on mandatory health insurance funds for 2012 was published. The given law provides for the maintenance in 2012 of the compulsory health insurance premium at the level of 7% of the labor remuneration fund and other recompenses (3,5% for employer and employee). The compulsory health insurance premium set for 2012 constitutes the amount of MDL 2982. (Law No.271 of December 23, 2011, Official Monitor of the Republic of Moldova No.15 of January 17, 2012).

6. The Government has approved a new Regulation on delegation of employees entities from the Republic of Moldova, which came into force on January 13, 2012. This Regulation determines the manner of delegating and compensating expenses for delegation and it is applied to all natural and legal persons both under public or private law, who perform entrepreneurial activity, noncommercial organizations, including public institutions, regardless of the area of activity, type of property and legal form of organization. According to the new Regulation:

it was increased the limits of daily allowances and accommodation for detached employees; for the days of departure and arrival, allowances will be paid at the rate of 100% of the established rules;

in case of delegation for a single day on the territory of the Republic of Moldova, allowances will not be paid. Instead they will be paid abroad in the amount of 100% of the established rules;

expenses for use of linen in trains is compensated without providing primary documents;

expenses for travel by taxi to the railway station, terminal, landing and return (both home and abroad) can be compensated only if the arrival or departure time does not correspond with the public transport schedule.

Also note that the Regulation contains also a series of gaps, which need to be removed by their regulation. The Regulation does not establish which documents are considered travel documents on basis of which it will be possible to determine the period of effective stay, to demonstrate the economy class transportation, if the ticket is electronic. It does not establish who is obliged to issue the document certifying the schedule of public transport, both in our country and abroad, which day to apply the exchange rate in case of payment of travel expenses through corporate card, etc. (Government Decision No. 10 as of January 5, 2012, Official Monitor of the Republic of Moldova No. 7-12 of January 13, 2012).

7. Changes and additions were made to the Law on benefits for temporary work disability and other security benefits No. 289-XV of July 22, 2004. The new changes aim at funding sources for social security benefits, burdening even more the employer. Thus, starting with January 1, 2012, payment of compensations for temporary disability caused by common illnesses or accidents unrelated to work shall be as follows:

a) the first calendar day of temporary work incapacity is borne on the expense of the insured person;

b) the second, third and forth calendar day of temporary disability is paid from the financial means of the employer, while the unemployed person is paid from the state social insurance budget funds;

c) starting with the fifth day of temporary work disability, the compensation is paid from the funds of the state social insurance budget.

As an exception to this, the payment of compensation for temporary work disability caused by tuberculosis, SIDA, cancer of any type, or any risk of pregnancy termination, as well as the payment for temporary work incapacity for pregnant women registered in health care institutions, are entirely made from the state social insurance budget, from the first calendar day of temporary disability. (Law No.227 of November 25, 2011, Official Monitor of the Republic of Moldova No.7-12 of January 13, 2012 and Law No.3 of January 15, 2012, Official Monitor of the Republic of Moldova No. 21-24 as of January 27, 2012).

8. It was amended the Regulation on the manner exempting from VAT imports of raw materials, supplementary items and accessories needed for own production process of companies and organizations for and of blind people, organizations for and of deaf and disabled people approved by Government Decision No. 292 of October 8, 2010. The given changes refer to the criteria necessary to be met by the applicant to be included in the List of organizations and companies of blind, deaf and disabled people exempted from VAT on import of raw materials, supplementing items and accessories needed in production process and documents to be attached to the application. It was also established that the repeated request to be included in the mentioned List, if the organization or company have been previously excluded from it or not accepted, is to be submitted no earlier than the expiry of at least one reporting quarter from the date of the issue of decision.(Government Decision No. 28 of January 13, 2012, Official Monitor of the Republic of Moldova No. 15 issued on January 17, 2012).

Auditing and accounting

1. Changes and additions were made in the Audit Law No. 61-XVI of March 16, 2007. In the result of the amendments made, there was completed the list of types of activity the audit company, auditor individual entrepreneur have the right to carry out, with the activity regarding performance of functions of the Audit Company. At the same time, it was established that in addition to the audit, one and the same auditor cannot render services of fulfillment of functions of the Audit Committee within the same audited entity and for the same period of administration. (Article 6 of the Law). Also, it was increased from 3 to 7 consecutive years the period during which one and the same auditor cannot conduct the audit within the same audited entity. Now the entity who conducted audit for one entity during 7 consecutive years, will have the right to conduct audit for that entity only after the expiration of 2 years from the last audit (Article 11 of the Law). Starting with July 13, 2012, there will enter into force the provision according to which the auditor will perform audit activity as private entrepreneur auditor or employee of an audit firm or of a individual entrepreneur auditor (Article 5, paragraph 3 of the Law). (Law No. 267 of December 23, 2011, Official Monitor of the Republic of Moldova No. 13-14 of January 13, 2012).

2. Accounting Law No.113-XVI of April 27, 2007 was also amended. The amendments relate to the peculiarities in accounting record-keeping and submission of reports by public institutions. (Law No.267 of December 23, 2011, Official Monitor of the Republic of Moldova No. 13-14 as of January 13, 2012).

3. The Ministry of Finance of the Republic of Moldova approved the Method of paying and recording payments to the national public budget through the treasury system of the Ministry of Finance in 2012. The given provisions entered into force from January 1, 2012. (Order of the Ministry of Finance No. 1 of January 3, 2012, Official Monitor of the Republic of Moldova No. 13-14 issued on January 13, 2012).

Regulations in various fields

1. Law on state budget 2012 was published. The state budget for 2012 was approved with MDL 21.367.269,1 for incomes, MDL 22.164.269,1 thousand for costs, and a budget deficit of MDL 797.000,0 thousand. (Law No. 82 as of December 27, 2011, Official Monitor of the Republic of Moldova No. 19-20 of January 25, 2012).

2. Law on Editorial Activity No. 939-XIV of April 20, 2000 was changed and completed. The changes refer to organization of editorial activity, conclusion of publishing contracts, publishing rights, editorial production broadcasting. (Law No. 288 of November 25, 2011, Official Monitor of the Republic of Moldova No. 7-12 of January 13, 2012).

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January 2012

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