Current VAT refund mechanism discourages economic entities

The present mechanisms for refunding the VAT discourages the economic entities. Instead of financially stimulating the exporters, it causes them material damage. The VAT refund procedure is complicated and discriminatory. Related statements were made at a debate meeting organized by IDIS “Viitorul” on October 13, Info-Prim Neo reports. The meeting started with a presentation by Corina Gaibu, economist at IDIS “Viitorul”. She said that the exports in the eight months to August fell by 24.2%, while imports by 38.3%. The state arrears for refunding VAT exceeded 100 million lei. This affects the private business, which have to take out loans. “The VAT is an indirect tax, while its refunding is an act of paying back the money collected from private companies. The VAT refund procedure, when the companies are selected according to credibility criteria, is discriminatory,” Corina Gaibu said. It was proposed that the VAT be refunded according to the first come- first served principle and that the VAT refund term be decreased from 45 to 15 days. An electronic system for checking the documents presented by the economic entities is also required. Raisa Bejan, of the Union of Sugar Producers of Moldova, said that the number of inspections carried out at companies is often doubled, while the number of documents submitted for being refunded the VAT is very large. She said that some of the documents could be checked by state institutions over the Internet, stressing that the state should lay emphasis on the improvement of the business climate and creation of optimal conditions for entrepreneurial activity. Procopie Duca, the deputy head of the State Main Tax Inspectorate, said the fiscal employees consider that not every stamp should be checked. “We must indeed optimize the administration of the VAT. We can identify solutions in concert with economic entities and intellectual centers. It is not right for the economic entities to expect not 45 days to get the VAT back, but several months,” he said. Minister of Agriculture and Food Industry Valeriu Cosarciuc said the VAT refund mechanism could be improved only if the parties involved in this process have a correct behavior. The economic entity must pay the VAT dully, while the state must refund it within the required term. He also said that the government's fiscal policy for next year envisions the improvement of the VAT refund process, including in the agricultural sector. IDIS “Viitorul” pledged to add the proposals formulated by the debate participants to the study and present it to the Government and the business community.