September, 2012

We propose you to get acquainted with the legislative amendments and completions published in the Official Gazette of the Republic of Moldova during September, 2012.

Entrepreneurship activity

1. New Competition Law No. 183 of July 11, 2012 was published and it came into force on September 14, 1012. "Old" law on the protection of competition was repealed by an express provision of the new law. The new edition presents a significant qualitative and quantitative evolution of the regulation of the law object in comparison with the repealed law. The main differences that appear in the new competition law are the following:

the new law has a different way of approach, it is more complex, detailed and it implements a number of provisions of the EU legislation, it defines and regulates new concepts, such as "vertical agreements", "horizontal agreements", "concerted practices" "services of general economic interest", and "economic concentration", etc.

the law covers acts committed outside the country inclusively, which produce / may produce effects throughout the country;

the law provides detailed explanations on agreements between the enterprises and their illegality (tough cartels, minor anti-competitive agreements, dominant position, etc.).

the notion of "dominant position" becomes a wider and more interpretative one. Thus, the dominant position appears due to the maintenance of effective competition with the possibility to act independently (compared to competitors, customers and consumers).

the concept of "unfair competition" in the new Law and unfair competition actions does not refers just to economic operators with a dominant position in the market (as the old law stipulated). Also, the notion of unfair competition becomes a wider one (for example, instigation to the cancellation of the contract with the competitor, misappropriation of the competitor’s customers, confusion);

Economic fusions (merger, control taking over) shall be subject to evaluation and shall be notified to the Competition Council (authority in the field) when the turnover cumulatively performed by the involved enterprises exceeds 25 million MDL and there are at least two enterprises involved in the operation that have conducted (each enterprise separately) in the Republic of Moldova a turnover of more than 10 million MDL in the year preceding the operation;

other changes (especially procedural ones - how to determine a relevant market, how to notify the Competition Council and its duties, fines from 1% to 25% from the total turnover).

(Law No. 183 of July 11, 2012, Official Gazette No. 193-197 of September 14, 2012)

2. A new edition of the Insolvency Law No. 149 of September 14, 2012 was published on September 14, 2012, which will enter into force 180 days after the date of publication.

The most significant changes introduced by the new law are:

a) the procedures provided by the law:

Unlike the law in force, which provides for a general procedure of insolvency and a plan procedure, the new law distinguishes: I) the bankruptcy procedure in general procedure and in simplified procedure; and II) the restructuring procedure, including a specific procedure accelerated by the restructuring.

Bankruptcy procedure is generally applied when there are no claims for restructuring or there is not proposed in the procedural term any plan of restructuring, or it has not been accepted and confirmed. In this case the Court requires the appointment of a liquidator proposed by the creditors meeting who recovers and liquidates the debit mass. Duties of the insolvency manager cease when the Court establishes the liquidator’s duties, and previously appointed insolvency manager can be assigned as liquidator.

Simplified procedure of bankruptcy is applied (I) to the individual entrepreneurs and households (farms), entrepreneurial patent holders, (II) legal persons which do not have any good in their property or whose assets are insufficient to cover the trial, (III) commercial and non-commercial companies dissolved before the application of the introductive request, (IV) debtors who are not entitled to benefit from the restructuring procedure. Bankruptcy court has the right to cancel the administration right of the debtor and to appoint the liquidator. Restructuring is defined as insolvency proceeding applicable to the debtor for the payment of his debt, which provides for the development, approval, implementation and observance of the restructuring procedure plan, including, together or separately: a) operational and / or financial restructuring of the debtor; b) corporate restructuring by changing the capital structure, c) restraint of the activity through liquidation of some goods from the debtor's property; d) any other actions not prohibited by the law in force.

Accelerated restructuring can be applied to the "company in financial difficulty", which is defined by the law as an enterprise whose potential of economic and management viability is in a decreasing dynamics, but whose owner performs or is capable to perform enforceable duties.

b) capitalization of the debit mass

New regulations specify the procedure of rapid capitalization of the debit mass, establishing strict procedural deadlines for concrete procedural actions. Within not more than10 days after completion of the evaluation process of the debit mass the liquidator shall submit to the creditor meeting or committee a report on the evaluation of assets and their method of capitalization, specifying the manner of sale: in block or individually, by public auction, contest or direct negotiations, or a combination from the mentioned manners. If within 15 days after submission of the report, creditor meeting or the creditor committee did not say their opinion or did not approve the proposals submitted by the liquidator on the capitalization of the debit mass, the liquidator is entitled to apply to the bankruptcy court in order to confirm these proposals. In this case, together with the approval of the report, the capitalization of the debit mass is performed under the control of the insolvency Court. There are given details regarding the rules of the primary auction, repeated auction, discount auction, sale by competition (which was not previously covered) and sale through direct negotiations performance as well as proceedings of sale depending on the type of the property (securities, the shares of social capital; attachment and sale of the disputable property or transfer of the debts; sale of the company, etc.).

c) tables of claims

According to the stage of the process three types of tables of claims are distinguished: (I) preliminary table of claims - made by the temporary administrator, in the observation period according to the documents of the debtor; (II) final table of claims - insolvency manager/ liquidator will show all claims filed against the debtor's assets at the date of institution of the insolvency proceeding or simplified procedure of the bankruptcy until the election of the procedure for the development of the insolvency process. Table includes all claims filed against the debtor's assets at the date of institution of the insolvency proceeding or bankruptcy simplified procedure, including claims accepted in the preliminary table, and (III) definitively consolidated table - during the reorganization, insolvency or simplified bankruptcy procedure. This table is used for final distribution purposes, consignment of the judge having the effect of an irrevocable and final judgment for all validated claims, according to their rank and value.

d) questioned claims

It established a limited period of three days before the fixed hearing date for the examination of the validity of claims included in the final table for filing of appeals by the debtor and creditors against the indicated claims by the insolvency manager / liquidator in the final table. The appeals, submitted after the established deadline, are declared late and they shall be returned without being examined. The Bankruptcy Court solves the appeals within the validation sitting or within another special sitting.

e) late submission of claims

Excepting the case when the notification on the institution of the process has been performed violating the law, the holder of the claims before the institution of the process, who does not submit the validation request for claims by the deadline for the submission of claims provided by the insolvency court decision is deprived of the majority of inclusive rights to participate in the distributions of amounts or to make claims against the debtor, or their members or associates. In exceptional cases, if it is found out that the deadline for claim submission is not observed due to circumstances associated with the creditor or claim’s object or if the notification procedure of the institution of the process was not observed, the bankruptcy court instates the term, by conclusion, the demand for claims admission. Conclusion may be subject to appeal.

f) manners to develop the creditor meeting

Meeting of creditors (except the reporting meeting and validation sitting) can be made by e-mail or in mixed form. It allows voting by e-mail with signature certified and attested by the head of the legal entity or notarized by a public notary or by applying the electronic (digital) signature in compliance with the Law on electronic document and digital signature.

(Law No. 149 of June 29, 2012, Official Gazette No. 193-197 of September 14, 2012)

3. By supplementing the Law No. 845 of January 03, 1992 on entrepreneurship and enterprises, associations of savings and loan, and associations of micro-financing were excluded from the economic operators group that were bound to install POS terminals for economic operations performance. The amendment entered into force on September 14, 2012.

(Law No. 178 of July 11, 2012 on modification and completion of some legislative acts, Official Gazette No. 190-192 of September 14, 2012)

4. Law on Joint Stock Companies No. 1134 of April 02, 1997 and the Law on state enterprise No. 146 of June 16, 1994 were completed with provisions, which forcing the concerned enterprises to submit copies of the annual report to the Ministry of Finance auditor, are meant to strengthen the state's ability to control the ownership shares in the state-owned companies.

(Law No. 178 of July 11, 2012 on modification and completion of some legislative acts, Official Gazette No. 190-192 of September 14, 2012)

Capital market

1. On September 14, 2012 Law No. 171 of July 11, 2012 on capital market was published, this law will enter into force 12 months after its publication.

The most significant changes introduced by the new law are:

license shall be granted to the capital market participants on a limitless term, compared to five years, according to the Law on Securities Market.

regarding the majority of the equity, both for banking brokers and for the non-banking ones the maximum size of Equity for license of A category is of 50 thousand euro; for license of B category is of 125 thousand euro, and for license of C category the maximum amount of equity is of 300 thousand euro.

relating to capital requirements established for the stock market, which in new terminology shall be called market operator, maximum capital that are to be identified and raised will be of one million euro within 10 years from the entry into force of the law.

establishment of a compensation fund for victims that suffered as a result of securities transactions amounting to 6 thousand MDL for each injured person.

given the term of 18 months from the entry into force date for the compliance with the new provisions, the existing professional participants, whose license expires in 2015, will not incur additional expenses to obtain a license under the Capital Market Law.

significant expansion of the range of services that can be performed by the investment companies (consultancy, loans given to customers for transactions performance, etc.)

regulation of the multilateral transaction system, offering the possibility to create some new platforms for trading the financial instruments.

regulation of the collective investment bodies in transferable securities.

introduction of semester reporting by the entities of public interest, thus ensuring the supply of additional information to investors and, respectively, a better activity of the market.

(Law No. 171 of July 11, 2012, Official Gazette No. 193-197 of September 14, 2012)

Amendments to customs and tax legislation

1. Section 6) of the Article 103 of the Tax Code, which describes the supplies of goods and services exempted from VAT, was completed with provisions according to which the services provided by administrators (fiduciary liquidators / managers, provisional administrators) of the processes of insolvency, judicial restructuring, bankruptcy and liquidation are also exempted from VAT. Amendments shall enter into force on February 14, 2013.

(Law No. 164 of July 11, 2012 on modification and completion of some legislative acts, Official Gazette No. 190-192 of September 14, 2012)

2. Through the Law No. 178 of July 11, 2012, the Parliament approved the amendments to the tax and customs legislation of the Republic of Moldova.

Among the most important amendments we mention the followings:

a) Income taxation from royalties and interests

b) As of September 14, 2012, the term of "royalty" (applicable for income tax) will not include the income received as compensation for use or lease of the industrial, commercial or scientific equipment;

c) Starting with January 1, 2013, in terms of taxation, within the performance of the payments under royalty form, the followings will be applied:

from residents practicing the entrepreneurship will not be withhold an income tax from the source of payment;

for residing natural persons will be applied a final withholding tax income at the rate of 12%, without including this income in the gross income of the natural persons.

At the same time, the tax treatment of the interest payments to natural persons has not been changed (next it will be retained a 15% advance tax from such payments).

d) Amendments associated with the income tax from entrepreneurial activity

Economic operators will be entitled to deduct the expenses with donations for charitable or sponsorship purposes, performed for the benefit of the owner and union organizations inclusively;

Income and expenses resulted from revaluation of the fixed assets and other assets as a result of the transfer from the National Accounting Standards to International Financial Reporting Standards will not be considered as un-taxable and non deductible ones correspondingly.

e)Amendments associated with the natural persons’ income tax

From January 1, 2013 an 18% tax rate will be applied to the taxable income, which exceeds 26.700 MDL (compared to present 25.200 MDL).

At the same time, the annual exemptions that the residing natural persons will benefit will increase as follows:

Personal exemption / for husband (wife) - from 8.640 MDL to 9.120 MDL;

Major personal exemption / for husband (wife) - from 12.840 MDL to 13.560 MDL;

Simple exemption for dependents - from 1.920 MDL to 2.040 MDL and that for the disabled persons since childhood - from 8.640 MDL to 9.120 MDL.

f) Indirect methods of assessment of the natural persons’ taxable income.

As of September 14, 2012 a lot of amendments on the application of indirect methods for assessment of the natural persons’ taxable income were introduced. The most important amendments concern the following issues:

increase from 300.000 MDL to 500.000 MDL of annual individual expenditure cover, and as a result the residing natural persons, citizens of the Republic of Moldova (who do not practice the entrepreneurial activity) will be considered subject to assessment through indirect methods;

description of the procedures for reporting and confirmation of the availability of funds of the natural persons as of January 1, 2012;

fiscal authorities will be able to request information from the election commissions, National Commission of Integrity, bailiffs and lawyers inclusively;

information on transactions over 100.000 MDL (300.000 MDL in certain specific cases) will be presented by all persons who have this duty by law based on concluded contracts with the State Tax Inspectorate;

there were given details on the steps for the implementation of indirect methods of taxable income assessment and how to analyze and select the natural persons that are to be subjects to control;

there was established in an express way the responsibility of the fiscal authorities regarding the confidentiality insurance in the application process of indirect methods for the assessment of the taxable income;

according to the amendments to the Law on financial institutions, information that represents a banking secret shall be provided by the bank to the fiscal authorities in order to exercise by the former the duties established by the tax legislation. In their turn, the fiscal authorities will treat any received information as a tax secret that will not be provided to third parties, excepting the prosecution bodies and the courts in order to review the cases of tax evasion.

g) Value added tax (VAT)

Among the most important amendments regarding VAT we mention the followings:

Change of the VAT rates as of January 1, 2013:

Increase from 6% to 8% of the VAT rate for natural gas and liquefied gases from the customs tariff - 2711, which are imported and / or delivered throughout the territory of the Republic of Moldova;

Introduction of the VAT standard rate of 20% instead of 8% low rate for:

- sugar produced from sugar beet imported and / or delivered throughout the territory of the country;

- products in natural form produced from plant growing and horticulture and production in natural form produced from animal husbandry, live and slaughtered weight, produced and delivered throughout the country.

h) VAT return

Tax Code was completed with 2 new articles - 1012 and 1013, respectively:

According to Article 1012 of the FC 60% from the VAT value on the supply of production produced from plant growing, horticulture and animal husbandry, according to the manner established by the Government will be returned within a period not exceeding 30 days. Farmers and economic operators which, from January 1, 2013, will supply the Republic of Moldova with local production produced from plant growing and horticulture in natural form, or local production produced from animal husbandry, live and slaughtered weight in natural form, will benefit of VAT return.

According to Article 1013 of FC, economic operators who are not registered as VAT payer and who from January 1, 2013 will make capital investments (expenditures) in vehicles for the transport of at least 22 persons, excluding the driver will benefit of VAT refunds for these capital investments. VAT return will be made within a period not exceeding three tax periods following the period in which the investments were made.

VAT return in the both above cases can be made upon the request of the economic operators in their (or their creditors) debt settlement account or on the account of their future obligations towards the national public budget or by transfer to the bank account of the economic operators.

i) Amendments in the list of documents, which confirm the right for VAT return

There were excluded certain justification documents for confirmation of the supplies on export by mail (for example, confirmation of the recipient on receipt of the goods and confirmation of the operator regarding the receipt of goods).

j) Registration of the fiscal invoices in the Electronic Register

There was increased the term for registering the fiscal invoices in the electronic General Register (the Register) of invoices. Thus, the VAT payers will record every fiscal invoice in the Register within five working days from the day it was issued, the VAT payers, managed by the MSTI, will record them within 10 working days from date of issue. The new provisions are applicable from July 1, 2013.

VAT payers have not the right to place in the account the amount of the VAT paid to supplier for goods and services purchased in the Republic of Moldova if the fiscal invoice is not registered in the Register, provision applicable from September 14, 2012.

k) VAT exemption regime

As of January 1, 2013 VAT exemption will not be applied for long-term tangible assets meant for the placement in the stock capital (social capital).

The VAT is not applied to local goods previously exported and returned to the Republic of Moldova within three years, provided that at the moment of export the VAT value for the respective goods had not been returned. The proof of non-reimbursement shall be made by the certificate issued by the territorial state tax inspectorate under which administration the taxpayer is, or by the MSTI, as appropriate.

l) Place of service rendering for VAT purposes

There was specified the place of service rendering for information supply via telephone information centers established in subclass 74.86.0 of the Classifier of Economic Activities from Moldova. The place of rendering of these services is considered the beneficiary’s headquarters, or his residence, in case there is no headquarters.

m) Excise duty

There have been operated a number of major changes related to the excise duty. Among the most important we mention:

In the absence of documents stipulated by the law in force, which justify the export of goods subject to excise duty, a fine of 30% from the excise value shall be applied (provision applicable from September 14, 2012);

Increase of excise taxes for certain customs tariffs (for example, cars, beer made from malt, cigarettes, jewelry made from silver and other precious metals) as of January 1, 2013;

Implementation of some new customs tariffs in the list of goods subject to excise duty (for example, other tobaccos and other manufactured tobacco substitutes, fuel oil with a sulfur content exceeding 1% in its weight) as of January 1, 2013;

Change of excise rate structure for alcoholic beverages from production facility (amount in MDL +% from the value in MDL) in flat fee expressed in MDL as of January 1, 2013.

n) Tax and contravention administration

Special statute of limitations for contravention liability that affects the entrepreneurship, taxation, customs activity and securities will be of 12 months;

Contravention fines for the breach of the rules regarding accounting were increased;

There were introduced fines from 500 MDL up to 1.000 MDL for the inobservance of the requirements on use in the analytical and synthetic evidence of the forms established in the regulatory documents, as well as for the inobservance on the manner of performing inventory by the persons holding responsible positions within the companies.

All mentioned amendments related to tax and contravention administration came into force on September 14, 2012.

o) Immovable assets tax

If the owner of the immovable assets changes during the fiscal year, the previous owner may request the recalculation of the immovable assets tax proportionally to period in which he was subject to taxation;

The deadline for implementation of the regulations on land tax and immovable asset tax established by Law for the implementation of Title VI of the Tax Code was extended to January 1, 2014.

p) Road taxes

As of November 1, 2012, there will be introduce the road tax for vehicles not registered in the Republic of Moldova, which belong to natural persons (tax disc). According to the provisions of the Law, within two months the Government shall submit proposals for amending and supplementing the tax code in the paragraph on the introduction of this tax;

As of January 1, 2013, there will be changed the tax rates for the use of roads by vehicles registered in the Republic of Moldova, as follows:

- for semi-trailers with a lifting capacity stated in the registration certificate of more than 20 tons - the tax will be decreased to 2.000 MDL per vehicle;

- for trailers and tractors – the tax will be decreased from 1.000 MDL to 500 MDL per vehicle;

- for trucks with a total weight of up to 1.6 tons stated in the certificate of registration – the tax will be increased to 450 MDL per vehicle, and for those with a total weight from 1.6 tons up to 5 tons - the tax will be increased to 750 MDL per vehicle.

q)Amendments in customs legislation

Certain changes were introduced in customs regulations, and namely:

Change in the list of goods exempted from customs duty by introducing new customs tariffs (for example, books / albums with illustrations for children, topographic maps and other works) and exclusion of the customs duty exemption for tangible assets meant to be placed in the stock capital (social capital) of the economic operators;

Increase of the value for movable assets imported by the enterprises that perform the activity of leasing (in order to honor the obligations under lease agreements concluded with persons from the Republic of Moldova) up to 6.000 MDL, for the purpose of exemption from customs duty (provision applicable as of September 14, 2012);

As of September 14, 2012 the customs duty return shall be paid on the debt settlement account of the economic operators, either at their request, on the account of their future obligations to the public budget or by transfer on their bank account, if necessary;

Reduction from September 14, 2012 of the deadline for placing under customs regime of temporary admission of the goods entered under a lease agreement from seven years to one year for operational lease, and from seven years to three years for financial leasing (except financial leasing agreements, whose value exceed 2 million euro, and their maximum term for placement of the goods under customs regime of temporary admission will be of five years);

As of September 14, 2012 the computation base of the import rights when placing for free circulation of the goods sent in (financial or operational) leasing from 50% of the input value of the leased property or, respectively, of the transfer value of the property, as appropriate, will be increased to 70% of the input / transfer value of the property for the leased goods;

Introduction as of September 14, 2012 of the interdiction for the customs authorities to suspend banking operations related to the taxpayers' bank accounts opened under the provisions of the loan agreements concluded between the Republic of Moldova and foreign donors, in order to ensure the collection of import duties if the taxpayers evade from the honor of the import / export duties.

As of January 1, 2013, the threshold of age (period of exploitation) on the import of cars classified in customs tariff – 8703, and those planned to transport up to 20 persons in the customs tariff - 8702, shall be increased from seven to 10 years;

r) Amendments on payment of allowances for temporary work disability and other social insurance benefits

As of January 1, 2013, payment of allowances for temporary work disability due to common illnesses or accidents unrelated to work will be made by:

the employer for the first five calendar days of temporary work disability (with some exceptions),

state social insurance budget – beginning with the sixth calendar day of temporary work disability.

s) Amendments on entrepreneurial activity based on entrepreneur patent.

As of January 1, 2013, there will be allowed the development of entrepreneurial activity based on the entrepreneur patent (no matter the type of performed activity) if the sales revenue will not exceed 100.000 MDL in a period of 12 consecutive months.

It is also stated that after January 1, 2013 the rendering of services on preparation of accounting reports based on the entrepreneur patent will not be allowed anymore.

(Law No. 178 of July 11, 2012 on modification and completion of some legislative acts, Official Gazette No. 190-192 of September 14, 2012)

Guarantee of civil obligation execution

1. Law No. 1453-XV of November 8, 2002 on the notary activity was complemented by a number of provisions that are meant to ensure a quick and easy extinguishment procedure of the creditors’ obligations by investing enforceability to the notarized documents at the request of the parties. As a result of the amendments, since the enforceability law was applied in the notarized document, this gets power of enforceable document on the date of chargeability of the claim. Amendments shall enter into force on February 14, 2013.

(Law No. 164 of July 11, 2012 on modification and completion of some legislative acts, Official Gazette No. 190-192 of September 14, 2012)

2. In connection with the amendment to the Law on Notary activity No. 1453 of November 8, 2002, amendments were made to the Law on Mortgage No. 142 of June 26, 2008. In this way the law was completed with Article 331, "Execution of the right on mortgage on the strength of the notarial act vested with enforceability law". Changes to Law No. 1453/2002 give details on the guarantee of execution of the mortgage right under the notarial act vested with enforceability law without application of demand to the Court in order to obtain a writ or judgment. Amendments shall enter into force on February 14, 2013.

(Law No. 164 of July 11, 2012 on modification and completion of some legislative acts, Official Gazette No. 190-192 of September 14, 2012)

Ecofin Audit Service

Events

September, 2012

Partners

Awards