Russia’s WTO membership will cost Moldova MDL 150 mln

Russia’s membership in the World Trade Organisation (WTO) will deprive the budget of Moldova of MDL 150 mln, the economic analyst Veacslav Ionita told Info-Prim Neo. The expert says that once Moldova signed the protocol approving Russia’s entry to WTO, VAT will be paid according to the rules of this organisation. It means that it will not be levied like it was before – in the origin country, and not in the destination one. According to Ionita, before the wine embargo, Russia was the only country with which Moldova had a positive trade balance, meaning that exports exceeded imports. Together with the implementation by the Russia of the rules of the WTO and after the resumption of the exports of the agricultural and wine production to Russia, the VAT Moldova would obtain from the goods imported in this country should be smaller than the VAT Moldova must pay back to the companies that export goods to Russia. Ionita specified that when a company exports a certain good, the VAT is given back at the Custom-house authorities because it is included in the cost of the declared goods in light of the fact that in the destination country it would be obliged to the VAT for the exported goods. Speaking about the natural gas, another 5% of the VAT will be added to the settled USD 170. So far, they were collected when supplying the natural gas. But it is very possible that the Government will increase the VAT for natural gas to the standard value in the near future – 20% - in order settle the situation created together with the introduction of the tax in the destination country. In case the VAT of 20% will be levied, the final consumer will be obliged to pay about MDL 3.5 for 1 cubic metre instead of MDL 2.3 the equivalent of the tariff of USD 0.17 for 1 cubic metre. Moldova and the Russian Federation have recently signed in Moscow the bilateral Protocol on the finishing of the negotiations of Russia’s accession to WTO. The Protocol was signed at the meeting between the Russian minister of Economic Development, Gherman Greff and the Moldovan minister of Economy and Commerce Igor Dodon. The Agreement on the principles of levying the indirect taxes in the bilateral trade was not signed, although Dodon stated previously that Moldova would like to obtain the signing of the Agreement. It includes levying the VAT when importing the natural gas following the principle of the destination country not of the origin one, practice that was used by Moldova previously. Later, Igor Dodon told Info-Prim Neo that together with the signing of the Protocol on the accession of Russia to WTO, it will not be necessary to sign the agreement because the rules of the WTO stipulate levying the VAT in the destination country. Referring to the VAT of 20%, the minister said that the present tax of 5% will be maintained further on, so that the tariffs consumers will pay will not be much higher compared with the negotiated price of USD 170 for 1 thousand cubic metres.