President launches three initiatives to liberalise economy

President Vladimir Voronin launched three initiatives aiming at liberalising the economy of Moldova at a Government session on April 10. According to one of the initiatives, companies which will use their incomes for investments will not pay the income tax of 15%. In case dividends will be paid (using incomes for consumption) – the 15% tax will be kept. This initiative aims at determining investors to reinvest the obtained profit for expanding and developing their businesses. The other two initiatives aim at providing fiscal and capital amnesty. In the first case, all the debts, fines and penalties due the State Budget until 1 January 2007 will be cancelled. All the distraints levied on the assets of economic entities will be annulled, and the inspection bodies will be prohibited to verify previous fiscal periods, but the debts at the other chapters of the national public budget will have to be paid. At the same time, starting January 1, it is proposed to increase the penalties for not paying taxes to the national public budget. According to official data, as of January 1, 2007, the debts of the economic entities to the national public budget amounted to MDL 2 bln, of which up to MDL 300 mln could have been collected de facto, including from the sale of seized assets. The initiative on the amnesty of the capital includes all types of capital – from cash, businesses and stakes, to real estate and securities. The amnesty will be performed upon a written request. Regardless of the sum of the capital declared for amnesty, the state will legalise it for a tax of 5% of its value. The collected resources will be distributed equally: half to the state budget, the rest – to the budget of social insurances and the fund of health insurances. By means of this initiative, authorities hope to avoid the situation when the assets were registered at a lower value than the market price in order to avoid paying the Value Added Tax and the income tax, or the payments were made to companies in off-shore zones. Also, it is expected to avoid the practice when persons working abroad do not declare the obtained money. It is considered that this way, the phenomenon of money laundering will be diminished on the territory of Moldova, the investment climate will be improved and the inflow of investments into entrepreneurial activity will increase. At the same time, authorities promise that the fiscal and economic inspection bodies will not check the sources of the legalised capital, excepting the money laundering cases stipulated by the legislation. According to Voronin, these initiatives will increase economic capitalisation, intensify the investment process and will reduce inflation. In what concerns the business environment, the initiatives will reduce the underground economy, reroute a considerable part of the “black” money into the official money circulation and will reduce preconditions for corruption. These initiatives will be submitted to Parliament for consideration by the head of state within 10 days.