Ecofin Audit Service

Kristina Gurulea.
Legal Department director "Ecofin-Audit-Service" Audit Firm, Master in Law.

Legislative news: "Fin-Consultant" Monitoring.
We continue to inform you about the news, amendments and modifications introduced in the legislation of the Republic of Moldova within December 2009.

Entrepreneurship
1. As a result of the amendment of the law on the audit activity No. 61-XVI as of March 16, 2007 it has been exclude the notion of entity of public interest. At the same time, the notion of public interest regulated by the Law on Accounting No. 113-XVI as of April 27, 2007 was amended, being defined as the entity with considerable interest for the public due to the (type) field of activity and which are a financial institution, an investment fund, an insurance company, a non-governmental pension fund, a trade society the shares of which are listed at Stock Exchange of the Republic of Moldova. Also, the term of passing to International Financial Reporting Standards (IFRS) was put prolonged, being stated that an entity of public interest is obliged to draft financial reports in accordance with IFRS starting with January 1, 2011. (Law No. 108-XVIII as of December 17, 2008, Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

2. In connection within the fact that the Law on tobacco and tobacco products No. 278-XVI as of December 14, 2007 forbids smoking in public places. The National Agency for Competition Protection, in the view of creating conditions for fair competition, issued a Prescription which obliges the economic entities who carry on their activity on the territory of the Republic of Moldova to manage bars, restaurants, clubs and other similar public places to take measures of implementing the law mentioned, and namely – to separate or delimitate areas for smokers and non-smokers by necessarily placing a sign “Smoking sector” and “Non-smoking sector”. The areas destined for smoking must be equipped well, ventilated, with ashtrays and fire extinfuisher and the area must occupy not more than 50% of the entire public area etc. At the same time, according to the Prescription mentioned, local public authorities follow to revise the normative arrangement that regulates the issuance of permissions for the working activity of the economic entities that manage bars, restaurants, clubs and similar public places, thereby ensuring the verification of the observance of restrictions on smoking in public places. (Prescription of the National Agency for Competition Protection No DCF-10-09/31 as of December 3, 2009, Official Monitor of the Republic of Moldova No. 181-183 as of December 11, 2009).

3. In the view of ensuring the right of final users to receive complete, incomparable and easily accessible information to final users regarding the quality of supplied electronic communication services, the National Agency for Regulation in Electronic Communications and Information Technology issued the Quality parameters for electronic communication public services, which establish quality parameters for public landline phone services, public services of internet access, public service of electronic communications supplied via the networks that use IP protocol etc. (Decision of the National Agency for Regulation in Electronic Communications and Information Technology No. 278 as of November 17, 2009, Official Monitor of the Republic of Moldova No. 187-188 as of December 18, 2009).

4. Individuals and legal entities which practice industrial/trade fishing in natural water fish breeding locations are obliged not to exceed the fishing quotas that are established yearly for each natural water fish breeding locations apart. Thus, the Ministry of Environment issued the Order No 4 as of November 27, 2009, which approved the quotas for 2010. (Official Monitor of the Republic of Moldova No. 173 as of December 1, 2009).

5. In order to ensure safety of livestock products destined to human consumption and prevent disease spread from livestock to people, the Government issued the Decision on certain conditions regarding the importation or transit of livestock intestine, thereby approving the applications for necessary certificates to be obtained and determining that:

• importations of lots of intestines follow to be authorized by the Sanitary-Veterinary Agency for Livestock Products Safety;
• transition along the Republic of Moldova territory of livestock products follow to be accompanied by sanitary-veterinary certificate, signed by the official doctor from the countries whence the importation is made.

(Government Decision No 838 as of December 17, 2009, Official Monitor of the Republic of Moldova No 193-196 as of December 29, 2009).

Tax legislation
1. There have been introduced amendments and adjustments in the Tax Code No. 1163-XIII as of April 24, 1997 (republished in the Official Monitor of the Republic of Moldova, special edition as of February 8, 2007):

• It has been introduced the notion of promotional campaign – mode of promoting sales through the organization of competitions, games, lotteries announced to the public and carried on for a limited period of time, with prize and bonuses awards (article 5, clause 38). Thus, the situation where monetary or non-monetary prize, gift, bonus awarding for advertising purposes is engaging in the notion of promotional campaign, economic entities won’t be able to apply article 901 (1)-(2) of the Tax Code.
• The income gained by individuals who are citizens of the Republic of Moldova from the alienation of agricultural land into the category of untaxed income (article 20, letter o1)
• Starting with January 1, 2009, personal exemption for resident individuals was raised from 7,200 to 8,100 lei (article 33) Also, the exemption for maintained persons was increased from 1,680 to 1,800 lei yearly (article 35).
• Starting with the tax period 2010, the amount withdrawn from the authorized capital stock related to the increase of authorized capital stock from the spread of net profit and/or other sources considered personal assets between among shareholders (associates) according to the share put as authorized capital stock follow to be taxed to payment source. (901 (31) letter (b)).
• Every payer of winnings from gambling is obliged to withhold 18% (901 (31)) from every winning and pay it to the budget. Earlier, before December 31, 2009, the gtiven tax made up 10%.
• It has been determined that the following is not subject to VAT taxation:
  • provision of goods, services within the free economic area;
  • income gained as the interest by the lessor from a leasing agreement;
  • provision of goods and services supplied free of charge for commercial and/or purposes of promotion of sales amounting to 0.1% from the income from sales gained during the year previous to the year when the provision is made;
  • property alienation within the reorganization of economic agent (article 95 (2)).
• The VAT share of 8% was introduced for sugar beet imported and/or supplied on the country’s territory and for crop sector and horticulture production and production of natural livestock, live and sacrified weight, produced and supplied on the country’s territory (article 96, letter (b)).
• The moment of VAT payment to the budget for service importation is the date of service supply is the date of service supply indicated in the document confirming service supply and not the moment of payment of the service supplied, as it was until December 31, 2009 (article 101 (4)).
• It has been excluded the interdiction of returning VAT at the account of repaying taxes administrated by costumes bodies (article 101 (5)). This will facilitate the procedures of making transfers within the state budget at the expense of tax facilities, including in cases of cession regulated by the Tax Code. Also, the given amendment will improve the tax-payers’ financial and economic situation.
• The services for public registration of legal entities and individual entrepreneurs was exempted from VAT along with the services of information supply from the respective state registries (article 103 (1) clause (6)).
• Also, all services of passenger transportation on the country’s territory (urban, suburban, interurban) and services of ticket sales for passenger transportation on the country’s territory (article 103 (1) clause (17)) were exempted from VAT.
• The importation and/or supply on the country’s territory of goods, services destined to the investment assistance projects financed at the expense of loans and grants provided by the Government or under state guarantee, at the expense of loans provided by international financial organizations (including as Government’s share), as well as at the expense of the grants issued to budget-financed institutions were excluded from the category of supplies exempted from VAT and were included in the category of VAT taxed under “0” rate (article 104, letter (c1)).
• In order to define the date of transactions of real estate, it has been clearly regulated that in case of real estate transactions, the date of transaction is considered the date when the real estate alienated to the buyer’s property on the date of their registration in the real estate registry. (art. 108, cl. (3))
  Article 111, which regulated the place of service supply was amended. It was defined that for the services rendered within science, entertainment services the place of render is considered the place of the actual service render. Also, it is clearly stipulated that for marketing services the place of service render is considered to be the service beneficiary’s place. For IP connection services, the place of service supply is the supplier’s place (residence).
• In the view of establishing clear norms in regard to the maintenance of status of VAT payer for the tax-payers who suspend their activity, article 113 was completed with paragraph 5, which stipulates that in case of activity suspension, the taxed subject’s registration as VAT tax payer, according to the legislation in force, will not be cancelled, and during the activity suspension period the is not taken into account in the determination of 100,000 lei limit (minimal amount that a VAT payer must hold for not losing the status of VAT payer). In cases when transactions are made during the suspension period, the VAT payer’s duties and rights are regained starting with the first day of the month when the transaction was made.
• Objects made of lead crystals were included in the category of goods subject to excise tax. The share for excise tax was increased (Appendix to the Title IV).
• For improving tax-payers’ responsibilities, it has been introduced a fine of 18,000 lei for repeatedly committed infringement related to the carrying on of entrepreneurial activity without using cash desk machine and/or POS terminals (article 254 (4)).
• It has been introduced a fine of 10% of the value of transaction with goods of social importance approved by the Government (but not less than 500 lei) for not including in the invoice and/or tax invoice, or for incorrectly indicating:
  • the sale price per unit, including VAT price fixed by the manufacturer of goods, for the goods produced on the country’s territory;
  • price of acquisition, including VAT for the goods imported for which a standard VAT share is set;
  • the acquisition price, excluding VAT, for the goods imported for which a reduced VAT share is established (article 257 (6)).

These and other amendments and adjustments introduced in the Tax Code were published in the Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009 and came into effect on January 1, 2010. (Law No. 108-XVIII as of December 17, 2009).

2. Article 24 of the Law No. 1164-XIII as of April 24, 1997 for the application of titles I and II of the Tax Code (republished in the Official monitor of the Republic of Moldova, special edition as of February 8, 2007) was amended. Thus, in the view of supporting individuals who open bank deposits, the exemption from income tax for the interests gained from bank deposits was prolonged until 2015. Also, until 2015 legal entities’ interests from bank deposits deposited for a term longer than 3 years and the corporative securities under stocks (loan securities) issued for a term longer than 3 years shall not be subject to taxation. These and other amendments were published in the Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009. (Law No. 108-XVIII as of December 17, 2009).

3. The Law No. 1054-XIV as of June 16, 2000 on the implementation of Title IV of Tax Code was amendment and adjusted (republished in the Official Monitor of the Republic of Moldova, special edition as of February 8, 2007). In the view of improving the legislation regarding application of excise tax on jewellery and goods made of precious metals, there have been introduced clauses according to which the economic entities to which individuals and legal entities supply jewellery and goods made of precious metals and precious stones and precious stones, including imported articles, without justifying documents (customs declaration copy, payment document, other documents confirming excise tax payment) for further sale: calculate and pay excise tax, keep separate bookkeeping on the goods subject to excise tax received for further sale to individuals and legal entities without documentary confirmation of excise tax payment, provide statement on excise tax payment (Law No. 108-XVIII as of December 17, 2009, Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

4. Also, the Law No. 1056-XIV as of June 16, 2000 on the implementation of Title VI of the Tax Code was amendment and adjusted (republished in the Official monitor of the Republic of Moldova, special edition as of February 8, 2007). (Law No. 108-XVIII as of December 17, 2009, Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

5. As a result of the amendment of article 4 of the Law No. 408-XV as of July 26, 2001 for the implementation of Title V of the Tax Code (republished in the Official Monitor of the Republic of Moldova, special edition as of February 8, 2007), there have been defined the categories of economic entities for which it is not mandatory to install POS terminals, and namely these are the economic entities the sales (from wholesale and retail trade, and/or from service render) exceeded 2 million lei during the previous year are not obliged, until July 1 of the next year, to install POS terminals, including in the subdivisions where, in the same period, the volume of sales exceeded 500,000 lei, in cases when:

• payments were made exclusively through banking transfers, except for the ones made via commercial banks;
• activities mentioned are carried on in villages, except for the ones included in municipalities and towns.

These and other amendments were published in the Official monitor of the Republic of Moldova No. 193-196 as of December 29, 2009. (Law No. 108-XVIII as of December 17, 2009).
6. According to the Law on state social insurance budget for 2010, the following was established:

• In 2010, individual contribution of state compulsory social insurance dues owed by insured employees, employed on individual labour agreement basis or on other agreements basis in the view of conducting works and render services, by persons who hold an elective position or are named in executive authority positions, by public notaries, judges, prosecutors, lawyers and parliamentary workers was maintained on the level of quantum set for 2009, making up 6% of the salary and other payments. State social insurance due owed by employees make up 23% of the waging and other payments.
  Employers will pay 33% to the waging and other payment fund for their employees working under special working conditions (the list can be found in Appendix No. 6 of the Law and regards a certain category of personnel from civil aviation).
• In case of individual insurance, on basis of an agreement concluded with the National Social insurance Chamber, the state social insurance due will make up 4,044 lei per year, and for individuals owning or renting agricultural lands, who individually work the land – 996 lei per year, but not less than 1/12 of the given monthly amounts, which confers to the payer the right for minimal pension for age limit and benefits for decease.
• For entrepreneur patent holders (except for pensioners, disabled persons, as well as persons who are part of other payer categories of state compulsory social insurance dues), it was clearly stated the duty to transfer to social insurance budget 4,044 lei annually for one person, but not less than 1/12 of this amount monthly, depending on the length of the activity carried on on patent basis.
• The penalty for not paying on time the state compulsory social insurance due was decreased from 0.3% to 0.1% of the arrear amount for every delayed day.
• In 2010 the quantum of unique benefit for child birth was increased. It will make up 1,700 lei for the first child and 2,000 lei for every next child.
  The sorts of rights and incomes out of which state compulsory social insurance dues are not calculated (Appendix No. 5 of the Law) remained the same, only 24th clause regarding blood donators was defined. Thus, it has been clearly stipulated that state compulsory social insurance dues (including individual state compulsory social insurance dues) are not calculated from the compensating payments for blood donation according to Government Decision No. 1240 as of October 27, 2006, on the approval of norms of provision with food products, medicines and preparations for ill people (adults and children), as well as compensating norms for blood donators and their feeding.

(Law No. 129-XVIII as of December 23, 2009, Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

7. According to the Law on compulsory medical assistance insurance for 2010, the first compulsory medical assistance insurance calculated in percentage rate out of the salary and other payments was set at 7% (3.5% for employer and 3.5% for employees). The compulsory medical assistance insurance premium calculated in fixed amount in absolute value was set at 2,478 lei. (Law No. 128-XVIII as of December 23, 2009, Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

8. The Government approved the Regulation on the mode of requesting excise tax certificate, completing statement on excise tax and mode of accounting goods subject to excise tax conveyed (transported) from excise tax room. The mentioned Regulation’s clauses come into force on January 1, 2010. (Government Decision No. 843 as of December 18, 2009, Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

9. It has been approved the sample application of the Information on the tax on use of roads by motor vehicles that have a total weight, load bearing per axis or dimension exceeding the limits allowed, as well as the Instruction on the mode of completing and presenting it. The mode of calculating total weight, load bearing per axis or dimensions is defined by the Regulation on the authorization, control and transportation on public roads of exceeded weights and/or in vehicles exceeding allowed limits, approved by the Government Decision No. 1073 as of Octomber 01, 2007. At the same time, it has been that the information which follows to be presented for IV quarter of 2009 will include all the data regarding the subjects of their taxation, starting with August 21, 2009, protocols on weight per axis was drafted. (Order of the State Core Tax Inspectorate No. 317 as of November 27, 2009, Official Monitor of the Republic of Moldova No. 174-176 as of December 4, 2009).

10. The Government approved the average economy salary forecasted for the year 2010 in the quantum of 2,950 lei. It is used for determining the maximal monthly basis of calculation of individual social insurance dues, maximal calculation basis for the benefit of temporary labour incapacity, maternity benefits etc. (Government Decision No. 773 as of November 27, 2009, Official Monitor of the Republic of Moldova No. 173 as of December 1, 2009).

11. The Government approved the Program of economic stabilization and revival of the Republic of Moldova during 2009-2011, which stipulated that, for stabilizing and optimizing public finances, the following was foreseen:

• maintaining zero share for tax on reinvested income, with it being reintroduced in 2012, at 10% rate;
• speeding up the process of implementation of the new taxation system of real estate goods with industrial commercial purposes, garages, gardening areas and construction located nearby, real estate goods with agricultural destination;
• finalizing the process of evaluation of individual houses located in rural areas of Chisinau and Balti municipalities etc.

Also, the objectives for 2009-2011 that regard economic activity revival, efficient and justified social protection were established. (Government Decision No. 790 as of December 1, 2009, Official Monitor of the Republic of Moldova No. 174-176 as of December 4, 2009).

12. It has been approved and published the list of economic entities which can benefit in 2010 of the right of independently print tax invoices on special paper with protection signs. (Order of the State Core Tax Inspectorate No. 363 as of December 16, 2009, Official monitor of the Republic of Moldova No. 193-196 as of December 29, 2009).

13. The Inter-Departmental Commission for cash desk and control machines decided to exclude from the Unique Registry of cash desk and control machines the following models: “VDM-261 FM”, “OMRON RS 19 MF”, “MINI-500.02 ME” and “DATECS MP-500 SV”, December 31 2009 being set as the limit date of using these cash desk and control machines models. (Decision of the Inter-Departmental Commission for cash desk and control machines No. 17-6/3-22/04-2009 as of November 19, 2009, Official Monitor of the Republic of Moldova No. 173 as of December 1, 2009).

Banks and banking activity
1. The National Bank of Moldova operated amendments and adjustments in the Instruction on reporting certain currency transactions made by licensed banks, approved by the Decision of the Management Board of the National Bank of Moldova No. 11 as of January 22, 2009. Thus, it has been introduced an obligation for licensed banks to draft and provide to the National Bank of Moldova the Statement of loans/credits regarding direct investments in the Republic of Moldova received by a licensed bank and the Statement on conducting operations according to loan/credit agreements regarding direct investments in the Republic of Moldova received by a licensed bank. The mode of drafting the mentioned statements, terms for providing them, the necessary documents requiring to be attached to them is stated in the Decision of the Management Board of the National Bank of Moldova No. 231 as of October 15, 2009. The first reporting will be made by licensed banks until December 10, 2009 for the months of January-November 2009. (Official Monitor of the Republic of Moldova No. 180 as of December 8, 2009).

2. It has been adjusted and amended the Regulation on the mode of guaranteeing of credits issued by the National bank of Moldova to banks No. 38/08-01 as of November 15, 1996. (Decision of the Management Board of the National Bank of Moldova No. 256 as of November 27, 2009, Official monitor of the Republic of Moldova No. 181-183 as of December 11, 2009).

Regulations in various fields
1. The Law on State Budget for 2010 was published in the Official Monitor of the Republic of Moldova No. 193-196 as of December 29, 2009, being approved an amount of 15,318,344.9 thousand lei as revenues and 19,454,519.2 thousand lei as expenditures, with a 4,136, 174.3 thousand lei. (Law No. 133-XVIII as of December 23, 2009).

2. It has been published the Mode of paying and accounting payments to the national public budget through the treasury system of the Ministry of Finance in 2010 No. 07/1-6/161 as of December 15, 2009. The given document sets out the particularities of paying and accounting revenues in the national public budget in 2010 through the treasury system. (Official Monitor of the Republic of Moldova No. 191-192 as of December 25, 2009).

3. Reporting entities (financial institutions, audit companies, insurance companies, notaries etc.) mentioned in the Law on the Prevention of Money Laundering and Terrorism Financing No. 190-XVI as of July 26, 2007, are obliged to inform the Centre for Combating Economic Crimes and Corruption about any suspicious activity or transaction. In this view, the Service of Information and Security issued the Order No. 75 as of November 14, 2007, which approved the List of persons and entities involved in terrorism activities. The Order of the Information and Security Service No. 72 as of November 27, 2009, the given lists were amendment. (Official monitor of the Republic of Moldova No. 189-190 as of December 22, 2009).