Raising the ceiling for value added tax payers from 1.2 million to 3 million lei is provided for in a legislative initiative registered in Parliament by MP Veaceslav Nigai, deputy chairman of the Respect Moldova party. According to the MP, in the current economic context, marked by inflation, the current ceiling has become irrelevant and constitutes a significant barrier to the development of businesses, IPN reports.

“This low limit becomes a considerable administrative burden, discourages growth and, last but not least, encourages the artificial fragmentation of businesses or even a slide into the informal economy”, the MEP added, quoted in a press release of the political party.

The party’s representatives argue that the proposed amendment will relieve a considerable number of small and medium-sized businesses from the complex obligations related to VAT collection, registration and reporting. Firms that will no longer be VAT payers will retain the VAT amounts, significantly improving their cash flow.

“This liquidity can be used for investments, expanding production capacities or creating jobs,” said Iulia Costin, also the party’s vice-president. She added that although the state budget will collect about 150-200 million lei less revenue in the first years of implementation, the long-term benefits are considerably higher. “In 2025, the budget forecasts VAT revenues of over 36 billion lei. So this ‘loss’ is only 0.5-1% of the total. This is a small price for the oxygen we provide to SMEs”, the politician noted.

Another vice-president of the Respect Moldova party, Eduard Grama, a former minister of agriculture, noted that many small and medium-sized businesses in this sector face significant administrative challenges. By removing the VAT tax burden for more producers and processors, these businesses could become more competitive.

Small and medium-sized enterprises account for 99% of all reporting enterprises in the country. They employ more than 352,000 people, or 65.3% of all employees, according to National Bureau of Statistics data for 2023.