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 August 2010.

Entrepreneurship
1. It has been modified and amended the Law on the regulation of entrepreneurial activity on license basis No. 451-XV as of July 30, 2001. The modifications aim the list of types of activities subject to licensing (it has been reduced), the form of presentation of documents for obtaining / prolonging the active license term, validity term of the license, the procedure of issuance and prolonging of license etc. (Law No. 176 as of July 15, 2010, Official Monitor of the Republic of Moldova No. 141-144 as of August 10, 2010).

2. In order to given incentive to business activities and to facilitate the initiation of business in the Republic of Moldova, there have been introduced amendments in the Law on public registration of legal entities and individual entrepreneurs No. 220-XVI as of October 19, 2007. as a result of these modifications, the founders’ obligation of presenting for officially registering a company the document confirming the founder’s due payment in the legal entity’s (which follows to be registered) stock capital has been excluded. This, respectively will exclude the necessity of opening a temporary account in a bank licensed in the Republic of Moldova, thus a permanent account being opened. (Law No. 184 as of July 15, 2010, Official Monitor of the Republic of Moldova No. 141-144 as of August 10, 2010).

3. The National Commission of Financial Market approved the Instruction on the content, mode of drafting, presenting and publishing the annual report on movable values (securities) of a joint stock society. The instruction regulates the content and mode of disclosing information by a joint stock society which, by the end of management period, complies with the following criteria:

• has a registered capital accounting at least for 500,000 lei and a number of more than 50 share-holders, together with the share-holders represented by the nominal holder.
• the society’s securities are traded on stock exchange;
• is a commercial bank, insurance company, investment fund, non-governmental pension fund, on-going privatizing joint stock company or a joint stock company which placed publicly its securities during their circulation period;
• is a joint stock company mentioned in letter (a), (b), (c) and, according to present legislation is qualified as an entity of public interest. (Decision of the National Commission of Financial Market No. 18/10 as of May 14, 2010, Official Monitor of the Republic of Moldova No. 150-152 as of August 20, 2010).

4. The Government approved amendments to the Government Decision No. 643 as of May 27, 2003 on the approval of Methodological norms and classification criteria of the structures dealing with tourists with duties of accommodation and dining services.
The amendments aim the documents necessary to be provided to the Agency of Tourism for classifying the structures of tourist accommodation, term of validity and prolonging for classification act etc. (Government Decision No. 670 as of July 2010, Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

Tax legislation
1. It has been adopted the Law on facilities for liquidating the consequences of floods from summer 2010. The mentioned law foresees exemption from:

• VAT for goods, works and services destined to liquidating floods;
• customs tax and taxes for customs clearance for goods and services imported, destined to liquidating flood consequences’;
• excise-tax, for the types of fuel mentioned in the law.

(Law No. 191 as of July 15, 2010, Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

2. Basing on Law No. 191 as of July 15 2010 on facilities for liquidating the consequences of floods from summer 2010, the Government approved the Regulation on the mode of applying facilities for liquidating the consequences of floods form summer 2010. The mentioned regulation regulates the mode of applying exemptions from VAT for goods, works and services destined to liquidate the consequence of floods, supplied on the countrey’s territory, as well as the mode of applying exemptions from VAT, customs tax, excise tax and taxes for customs clearance of the goods imported, destined to liquidate the consequences of floods from summer 2010. The mentioned exemptions are applied for goods, works and services supplied on the country’s territory, for imported goods, starting with August 6, 2010. (Government Decision No, 153-154 as of August 24, 2010).

3. There have been introduced amendments to the Tax Code No. 1163-XIII as of April 24, 1997:

• the limit of goods supplied for compulsory registration as VAT tax-payer was raised from 300,000 lei to 600,000 lei.
• the goods and services imported or purchased in the Republic of Moldova by non-profit organizations which comply with the demands of article 52, in the view of forming social-care institutions, as well as goods and services imported or purchased on the territory of the Republic of Moldova by these non-profit organizations for the necessities of above-mentioned institutions were exempted from taxes. These and other modifications were introduced in the Tax Code by the Law No. 194 as of July 15, 2010. (Official Monitor of the Republic of Moldova No. 141-144 as of August 10, 2010).

4. As a result of modifications introduced in the Law on notary services No. 1453-XV as of November 8, 2002, by which there were excluded public and private notaries. The types of notaries were replaced by a single category of notaries – public notaries. The necessity emerged and it was necessary to introduce the given modifications in the Law on public social insurance budget for 2010 No. 129-XVIII as of December 23, 2009. As a result of the modifications it was determined that the insured employees who are public notaries until the status of public notary comes into force will pay an individual fee of compulsory social insurance amounting to 6% of the monthly salary and other compensations and contribution of compulsory state social insurance owed by the employer – 23% to waging funds and to other compensations. (Law No. 157 as of July 8, 2010, Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

5. There have been introduced amendments and modifications in the Law on mandatory medical care insurance No. 1585-XIII as of February 27, 1998. The most important amendments concern the detection of cases when the mandatory insurance policy is not valid anymore and cases when its validity is suspended. We emphasize the fact that some of the reasons that might serve as reason to suspend the validity of insurance policy is the suspension of labour agreement at the employee’s initiative, and as an exception it can be the partially-paid holiday for child-care until the age of 3 years and holiday for caring an ill person in the family of up to one year, according to the medical certificate. (Law No. 157 as of July 8, 2010, Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

6. Starting with August 6, 2010, at the request of entrepreneurial permit (patent), solicitors will be oblige to attach, beside the documents confirming the payment of contribution to public social insurance budget, the documents confirming the status of insured person in the system of mandatory medical care insurance. Some of these documents are: certificate confirming employment, pensioner certificate, disabled certificate etc. This stipulation was included in the Law on entrepreneurial permit No. 93-XIV as of July 15, 1998 by the Law No. 186 as of July 15, 2010. (Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

7. There have been introduced a row of modifications and amendments to the Law on the amount, mode and terms of paying the mandatory medical-care primes No. 1593-XV as of August 26, 2002:

• Public Fiscal Bodies will charge as determined for cases of compulsory payments that were not paid in time (charge of money from bank accounts, cash charging, sequester on goods, following contributors’ arrears), the primes of compulsory medical care as percentage contribution from the salary and other finance sources.
• The individuals which are included after 3 years of coming into force of the Law on compulsory medical care funds for the given year, in one of the categories of payers of the compulsory medical care insurance primes in fixed amount, which follows to insure individually, will pay within 30 calendar days starting with the day of inclusion in this category, medical care mandatory insurance prime in fixed amount, in an amount proportional with the number of complete months remained until the end of management period.
• In order to avoid double payment of insurance primes, the individuals, included at the beginning of the year in one of the categories of mandatory insurance prime tax-payers in fixed amount, who are included in the category of employees within a year and who confirm the payment of mandatory medical care insurance prime in fixed amount for the given year, will not pay the mandatory prime as percentage contribution from the salary or other sources of finance in the given year. In the mentioned case, the primes that are to be paid by the employer will not be calculated.
• It has been specified that only payers who have duties regarding the payment of mandatory medical care primes follow to provide quarterly to territorial tax bodies the report on the calculation and transfer of mandatory medical care primes. Thus, the obligation of presenting the given report in case the obligation of paying the primes is absent was excluded.
• It has been completed the Appendix 3 of the given Law, which determines the rights and incomes from which the compulsory medical care insurance prime is not calculated. Thus, primes will not be calculated:
  • On all types of social fees (clause 20);
  • Out of the incomes gained according to contracts for executing works or rende­ring services by contributors of compulsory medical care insurance primes in fixed amount and who confirm the fact of paying insurance primes in fixed amount for the respective management year (clause 27);
  • Out of the benefit received by employees from employers during the technical unemployment period (clause 30);
  • Out of unique incomes and benefits for the students graduating from educational institutions in the first 3 years of activity, according to article 11 of the Law on health care No. 411-XIII as of March 28 1995 and article 53, line (9) of the Law on education No. 547-XIII as of July 21, 1995 (clause 31).

These and other modifications were introduced by the Law No. 186 as of July 15, 2010. (Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

8. In connection with the modifications operated in the legislative acts regulating the particularities in calculating and paying compulsory medical care insurance prime, the Government introduced respective amendments and modifications in the Regulation on the mode of completing, issuing and accounting compulsory medical care insurance policies and the Regulation on checking the payment of compulsory medical care insurance primes in fixed amounts, approved by the Government Decision No. 1015 as of September 5, 2006, in order to bring them in accordance with the legislation. (Government Decision No. 743 as of August 18, 2010, Official Monitor of the Republic of Moldova No. 153-154 as August 24, 2010).

9. At the same time, the National Company of Insurance in Medicine has introduced amendments and modifications in the Order of the National Company of Insurance in Medicine No. 61-A as of April 8, 2005. The amendments and modifications refer especially to the “List of nominal accounting of employed insured persons”. (Order of the National Company of Insurance in Medicine No. 137-A as of August 5, 2010, Official Monitor of the Republic of Moldova No. 145-147 as of August 13, 2010).

10. There have been introduced amendments and modifications in the Contravention Code of the Republic of Moldova No. 218-XVI as of October 24, 2008, by which the punishments for breaking the legislation and rules in the field of compulsory medical care insurance have turned stricter and new infringements considerations were introduced in the given area. (Law No. 186 as of July 15, 2010, Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

11. As a result of the modifications introduced in Fiscal Code NO. 1163-XIII as of April 24, 1997, it has been determined that the supply of goods and services in the ranges of a leasing agreement (financial or operations) will be exempted from VAT. At the same time, there have been introduced modifications in the Customs Code of the Republic of Moldova No. 1149-XIV as of July 20, 2000, in the result of realization by the leasing-client of the option of acquisition of the item at the expiration of leasing agreement and of integral payment of leasing, the right to import (VAT, customs tax, customs clearance, excise-taxes) will not be calculated and will not be paid. Exemptions of leasing transactions from VAT and the rights to import will come into effect on January 1, 2011. (Law No. 193 as of July 15, 2010, Official Monitor of the republic of Moldova No. 135-137 as of August 3, 2010).

12. There have been introduced amendments in the Customs Code of the Republic of Moldova No. 1149-XIV as of July 20, 2000 and in the Law on the mode of introducing or taking out goods from the territory of the Republic of Moldova by the individuals No. 1569-XV as of December 20, 2002. As a result of this, it has been allowed to introduce on the territory of the Republic of Moldova motor vehicles of epoch which with the exploitation term older than 7 years. The motor-vehicle of epoch is defined as the motor transport mean of any brand or type and with an age of more than 30 years, which is a cultural value of the past times, confirmed by the empowered public institution. The introduced modifications are also referring to the declaration by action of the motor transport introduced on the territory of the Republic of Moldova by individuals. (Law No. 206 as of July 16, 2010, Official Monitor of the Republic of Moldova No. 141-144 as of August 10, 2010).

13. As a result of modifications of the Government Decision No. 484 as of May 4, 1998 “on the limits of expenses for insurance f economic entities and individuals engaged in entrepreneurial activity, allowed as deductions of expenses related to entrepreneurial activity for fiscal purposes” it was excluded the limit of deduction of expenses on facultative insurances. Earlier (before these modifications), the total amount of payments to budget for facultative insurances allowed as deductions of expenses related to entrepreneurial activity for fiscal purposes, could not exceed the amount of effective insurance prime paid in the corresponding tax year. (Government Decision No. 680 as of July 30, 2010, Official Monitor of the Republic of Moldova No. 138-140 as of August 6, 2010).

Banks and banking activity
1. The National Bank of Moldova decided to maintain:

• the basic rate applied for the main operations of monetary policy for short-term at the level of 7% annually;
• the interest rate for overnight credits at the level of 10% annually;
• the interest rate for overnight deposits at the level of 4% annually;
• the norm of mandatory reserves from the means attracted in Moldovan lei and in unconvertible currency, as well as the norm of compulsory reserves from the means attracted in hard currency, in the amount of 8% of the basic calculation.

(Decision of the National Bank of Moldova No. 148 as of July 29, 2010, Official Monitor of the Republic of Moldova No. 135-137 as of August 3, 2010).
2. Also, it has been maintained fixed the basic rate for long-term credits (more than 5 years) at the level of 7% annually. (Decision of the National Bank of Moldova No. 150 as of July 29, 2010, Official Monitor of the Republic of Moldova No. 135-137 as of August 3, 2010).

Accounting and audit
1. According to the stipulations of the Law on accounting No. 113-XVI as of April 27, 2007, the entities of public interest are obliged to apply, starting with January 1 2011, the International Financial Reporting Standards. In connection with the mentioned stipulation the Ministry of Finance approved the Order No. 69 as of September 17, 2009, the methodical recommendations on transition from National Accounting Standards to International Financial Reporting Standards. On August 4, 2010, through Order No. 101, the Ministry of Finance approved the modifications and amendments No. 1 in the Methodical recommendations on transition from National Accounting Standards to International Financial Reporting Standards. (Official Monitor of the Republic of Moldova No. 145-147 as of August 13, 2010).

2. The Ministry of Finance approved the Instruction on accounting in public institutions. (Order of the Ministry of Finance No. 93 as of July 19, 2010, Official Monitor of the Republic of Moldova No. 135-137 as of August 3, 2010).

Regulations in various fields
1. It has been modified and amended the Law on advocating No. 1260-XV as of July 16, 2002. The modifications refer to the demands determined for the conduction of the profession of advocate, practicing advocate, admission in advocate profession, self-administrating advocate bodies etc. Also, the law forbids representing the interests of guilty persons by persons without the status of advocate. The modifications and amendments to the mentioned law come into effect on the date of August 3, 2010, with the exception of stipulation concerning the forbiddance of other persons than the advocate representing interests in degrees of jurisdiction, which will come into effect on January 1, 2012 and of the article regulating the advocate’s dress code, coming into effect on January 1, 2011. (Law No. 102 as of May 28, 2010, Official Monitor of the Republic of Moldova No. 135-137 as of August 3, 2010).

2. At the same time, there have been introduced amendments in the Code of civil procedure of the Republic of Moldova No. 225-XV as of May 30, 2003. The modifications concern representation in degrees of jurisdictions, the persons having the right to defend their interests in degrees of jurisdiction either in person (in case of individuals) or via empowered workers (in case of legal entities) or via lawyers. It has been excluded persons’ right to be represented in degrees of jurisdictions by other persons than the ones mentioned. The side which succeeds in the suit will have the right for compensations of the expenses for legal assistance only in case they are represented in legal suit by an advocate. The mentioned modifications will come into effect on January 1, 2012. The reason these amendments are introduced aim avoiding cases when the incomes gained from representing persons in legal suits are not declared and for improving efficiency in justice as well as for ensuring qualitative and efficient defense within legal suit. (Law No. 102 as of May 28, 2010, Official Monitor of the Republic of Moldova No. 135-137 as of August 3, 2010).

3. Educational institutions which accept foreign persons and persons without citizenship, follow to take into account the fact the it has been modified the Regulation on training foreign persons and persons without citizenship in educational institutions of the Republic of the Republic of Moldova, approved by the Government Decision No. 746 as of June 21, 2003. The modifications concern the change of application for the candidates – foreigners and without citizenship – to the Ministry of Education for confirming the right to study, the actions which follow to be conducted by educational institutions when excluding foreign citizens and persons without citizenship etc. (Government Decision No. 764 as of August 19, 2010, Official Monitor of the Republic of Moldova No. 153-154 as of August 24, 2010).

4. There have been approved the modifications and amendments of the Government Decision No. 603 as of July 2, 1997 “on the approval of the Regulation on the fixation of prices for medicines, medical articles and other pharmaceutical products”. The amendments change the name of the mentioned regulation into the Regulation on the fixation of prices for medicines and other pharmaceutical parapharmaceutical products, the mode of fixing prices, the mode of calculating prices in the sale of medicines, other pharmaceutical and parapharmaceutical products, control of prices. (Government Decision No. 720, as of August 10, 2010, Official Monitor of the Republic of Moldova No. 148-149 as of August 17, 2010).