Valeriu Prohnitchi: Capital legalisation could bring in two years budget revenues of only 100 million lei

Capital legalisation could bring in two years incomes to the state budget of Moldova of only 100 million lei, as the international practice in the field shows, economic analyst Valeriu Prohnitchi said in reference to the findings of the survey “Fiscal amnesty and zero rate tax on income for businesses in Moldova: potential impact and risks”. According to the analyst, the experience of the countries which implemented the legalisation of capital shows that the collected incomes have amounted to only 0.4-4.5% of the GDP. Even though heavy inputs were forecast, the real results were disappointing. Thus, Germany gathered 1.1 billion euros out of 5 billions predicted. Belgium collected 0.5 billion out of 0.8 billion planned, while Kazakhstan only 0.45 billion euros out of 1 billion forecast. Prohnitchi says that the potential revenues from capital legalisation shouldn’t be overestimated, because the capital expatriated before the reforms wasn’t too large, and also because Moldova is not an attractive country for investments. Corruption, bureaucracy, unqualified manpower will impede the legalisation of capital, as in the case of foreign direct investment. At the same time, the Government hasn’t yet launched a public campaign for announcing the legalisation of capital. According to the expert, the holders of capital fear that the legalisation could imply two risks. First, it could disclose the third parties that wish to stay anonymous; second, it is not clear whether the discovery of violations could serve as reason for penal investigations. The legalisation of capital is regarded by authorities as bringing to daylight the material assets of the natural and legal persons. According to different estimates, these make up 30-65% of the total Moldovan economy. Until January 1, 2009, both natural and legal persons will be enabled to declare their assets, paying a legalisation fee of 5%. Legal persons will obtain the right to legalise their shares and other assets, but not cash. Moldovan authorities will not allow legalising the money of economic agents, according to the international standards of preventing and combating money laundering. Legalisation of assets is considered complete when the economic agents will pay the 5% fee of the difference between the balance sheet value of the asset and the value declared for legalisation. Individuals will be enabled to open a bank account holding the money intended for legalization and to pay the 5% fee to the state. In case of apartments, natural persons will pay the 5% fee of the difference between the values recorded at the relevant registering office and the real price on the market.