The Ministry of Economy supports the initiative to reduce the customs duties on raw material used by companies from the processing industry to 1%. In a press release, the Ministry says the initiative is aimed at ensuring a favorable investment climate and business-friendly working conditions in Moldova, IPN reports.

Legislative amendments are needed because the autonomous trade preferences granted by the EU to Moldova expired on January 1, 2016 and the new Deep and Comprehensive Free Trade Agreement between Moldova and the EU took effect. This covers the whole territory of Moldova, including the Transnistrian region. Unlike the previous regime, the new trade regime bans the use of the drawback (refund of duty) fiscal rules when the import taxes levied on goods that must be re-exported after being processed on the customs territory are fully or partially refunded.

The Ministry of Economy says that the largest part of the companies in Moldova, which wok under drawback regime, will have to pay taxes on the imported raw material from January 1, 2016, even if this is not intended for consumption on the home market and will be just a component of the re-exported goods.

So as not to block companies’ activity and extension plans and to alleviate the ban on using drawback, amendments were worked out to the Law on the Combined Nomenclature of Goods, which provide that the customs duties on particular goods used to make finished products in the processing industry will be decreased from 5%, 6.5%, 8%, 10% to 1%.

The Ministry of Finance and the European authorities are considering possibilities of annulling the clause from Protocol II, Article 14 of the Pan European Convention, which bans the use of the drawback fiscal rules.