Individual income tax rates have been lowered

The total sum of the income tax levied on individuals, including farms and individual enterprises, will constitute 7% of the annual taxable income which does not exceed MDL 25,200 and 18% of the annual taxable income which exceeds the aforementioned sum. The Parliament passed in first reading these amendments to the Fiscal Code on Friday, July 6, which is part of a larger package of amendments concerning the fiscal policy for 2008 proposed by the Government. For 2007, the same categories of persons will have to pay 7% of the annual taxable income which does not exceed MDL 16,200; 10% of the annual taxable income which exceeds MDL 16,200 and does not exceeds MDL 21,000; and 20% of the annual taxable income which exceeds MDL 21,000. In addition, the amount of the personal annual tax relief was increased from MDL 5,400 in 2007 to MDL 6,300 for 2008 and the annual tax relief for maintained persons was increased from MDL 1440 to MDL 1560. According to the Ministry of Finance, as a result of these measures the State budget will lose an estimate MDL 254.4 mln, which however will be saved by the population. MP Valeriu Cosarciuc of “Moldova Noastra” Alliance said that the cuts in income tax rates are not a viable solution and that the Government has to consider first of all a reduction in the contributions from economic entities to the Social Fund. If solutions are not found in this respect, the salaries will continue to be paid “under the table”, the MP says. The Communist MPs backed the cuts in individual income tax rates, arguing that “this is a part of the fiscal policy that was established in 2001”. The draft law which contains 22 articles proposes amending 20 laws, which result from the fiscal-budgetary policy of the Government for 2007, Goals of the middle-term fiscal-budgetary policy and fiscal administration (2007-2009) and complies with the provisions of the Concept on Fiscal Reform.