Caracteristica Sistemului de Impozitare Al RM La Etapa Actuala

8/13/2019 Caracteristica Sistemului de Impozitare Al RM La Etapa Actuala

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Moldova State University

Law Faculty

Features of the current tax system of the Republic of Moldova

Student: Oleg Andreev

Chisinau 2013


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Summary

Summary....................................................................................................................................2

Introduction................................................................................................................................3

Chapter I.....................................................................................................................................4

Chapter II....................................................................................................................................6

Literature..................................................................................................................................10


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Introduction

Financial resources provided by taxation systems appeared thousands of years ago and were

meant to carry out various functions. During the medieval Stefan cel Mare Moldova and the

aftermath Turkish domination most of the taxes collected by the state were spent on war,weapons, and law enforcements, nowadays the things have changed where taxes and fees

became a vital pillar which maintains the functionality of social systems, making the

education systems, healthcare systems, pensions, unemployment benefits, energy, water and

other public services being financed by the every single member of our society.


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Chapter IThe term ,,Tax'' comes from the latin ,,taxo'' which means ,,rate'' it is commonly known as a

financial charge imposed upon a taxpayer which could be a natural person or a legal entity.

These taxes are imposed by the state , failure to pay them is punishable by law1. Art.6 par.1,2

of the Moldovan Tax Code defines tax as a compulsory payment with gratuitous title, whichis not related to the performance of some specific and determined actions by the authorized

body or the official thereof, for or in relation to the taxpayer who made this payment. In the

same article the Code gives us the definition of the fee which is a compulsory payment with

gratuitous title, which is not a tax. In my opinion the definitions given by the Code are a bit

ambiguous. From my point of view the definition of the fees should be as follows:

compulsory payment with a free title which is paid in exchange to a service( de ex. taxa de

stat pentru cerere de chemare in judecata unde platim pentru serviciu, iar in cazul de ex.

impozitelor pe imobil platim fara a primi vreun serviciu).

Art. 2 defines the tax system of the RM as all taxes and fees, as well as the principles, forms

and methods for their imposition, modification and cancellation, stipulated in this Code and

all the provisions for securing their collection.Some of the modern functions of the tax system in RM include expenditures on: public order,

economic infrastructure, public works, operation of government, healthcare, financing the

budgetary sector etc. Despite the fact that the main task of the tax system is financing the

social systems , a fraction of the state's income goes to pay off the country's external debt.The

Governments of different states use different kinds of tax rates, it is done in order to

distribute the tax burden among the persons and layers of populations involved in taxable

activities such as business or labour.There is an opinion in doctrine that nation's tax system isoften a reflection of its common values or the values of those in power. To create a system of

taxation, a nation must make choices regarding the distribution of the tax burden who will

pay taxes and how much they will pay and how the taxes collected will be spent. In

democratic nations where the public elects those in charge of establishing the tax system,these choices reflect the type of community that the public wishes to create. In countries

where the public does not have a significant amount of influence over the system of taxation,

that system may be more of a reflection on the values of those in power. From my point of

view RM falls under the second variant due to the fact that public, small/middle business

entrepreneurs and civil society are disregarded as a fact laws and regulations are often

adopted in order to enhance the profit of big companies which are under the political

protection of the politicians.

As you already know the Moldovan tax system is based on the Tax Code and other

regulations passed on the basis on its provisions. The other documents as Government

regulations passed by the Executive ,Finance Ministry, Main Tax Service, Customs

Department, other central and local public authorities shouldn't contradict the Tax Code or

exceed this limits, in case we do have contradictions the provisions of the Code apply.

According to the art. 6 par.4 there are two levels of levying taxes in Moldova :on national and

on local level. The system of state taxes, duties and levies comprises income tax, VAT,

excises, privatization tax, customs duty and levies collected to the Road Fund. The system of

local taxes is much larger, according to the same article it includes land tax, real estate tax,

tax on use of natural resources, area development levy, local auction and lottery levy, hotel

levy, advertising levy, levy on use of local symbols, levy on placement of commercial

1Richard Wish Competition law


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objects, market levy, parking levy, health resort levy, dog owner's levy, levy on TV and film

productions, levy on crossing state border, customs area sale levy and passenger

transportation levy. In my opinion we need to take an advice from the US administration, due

to the fact that in the US, most of the taxes are either deducted from the salary or paid online

it decreases the level of corruption, saves time and removes the bureaucracy from their lives

.From my point of view there are no obstacles in order to implement this technique.The taxes, duties and levies stipulated by the Tax Code of RM and other tax regulations are

considered to be the sources of revenue to the budget. Income tax and road fees are

considered to be the regulatory sources of revenue of the budgetary system, while the real

estate tax is a regulatory source of revenue of local budgets. For local autonomies with a

special legal status the regulatory sources of revenue include also VAT and excises for goods

and services manufactured or provided on the territory of the autonomy. Article 13 of the Tax

Code defines taxpayers as natural and legal persons,who derive income in the fiscal year

from Moldovan sources as well as legal persons gaining income from any foreign sources and

individuals who derive investment or financial income from sources located outside of

Moldova.


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Chapter II

The Code is quite comprehensive so I will briefly analyze some of the most common taxes

,fees and terms. The taxable base which generally speaking represents the pure or gross

income or commonly speaking money ,,before tax''. This taxable base is generally the grossincome derived by the taxpayer from all sources, reduced by deductions and excluding

income exempt for tax purposes.2 T

The Code also establishes different tax rates according to the income of the subjects and to

the field of activity of the subjects. For the individuals, including peasant enterprises andsole proprietorships, are subject to income tax at the following rates:

10 percent of gross yearly taxable income between MDL 12,180 and MDL 16,200;

15 percent of gross yearly taxable income between MDL 16,201 and MDL 21,000; and

22 percent of gross taxable income that exceeds MDL 21,000

Legal persons pay income tax at the rate of 20 percent.3

One of the most common taxes is the VAT, it is a state tax and a form of collection to the

budget of part of the value of delivered goods and provided services that are subject to

taxation in Moldova, as well as part of taxable goods and services imported to Moldova.The

Code establishes couple of criterias by the instrumentality of which subjects are or are not

subjected to the VAT. According to the Code the following persons shall be subject to

VAT:legal entities and individuals, which are registered or are subject to registration as a

VAT payer; legal entities and individuals importing goods, except for individuals, who

import goods for personal use or consumption, the value of which does not exceed the limits

established by the current legislation; legal entities and individuals importing services

considered as taxable deliveries carried out by such persons.

Also there is a specific category of taxable objects,the taxable objects include:supply of

goods and services by taxable persons as a result of their business activity in Moldova;import

to Moldova of goods and services, except for goods imported by individuals for personal use

or consumption, the value of which does not exceed the limits established by the current

legislation.Article 96 of the Tax Code provides for the following VAT rates (a) standard rate

in the amount of 20% of the taxable value of imported goods and services as well as supplies

made in Moldova(b) reduced rates in the following amounts 8% for bread and bakeryproducts, milk and dairy products delivered in Moldova, except for food products destined

for children and not subject to VAT 5% for natural and liquefied gas, both imported to and

delivered in Moldova zero rate for certain eligible supplies of goods (services).An excise is a

state tax established for certain types of consumer goods and gambling activity.Pursuant to

the Tax Code, the following persons shall be subject to excise taxes:legal entities and

individuals processing and/or manufacturing excisable goods in Moldova; legal entities and

individuals importing excisable goods, except for excise-exempt goods stipulated by the Tax

Code; legal persons practising gambling activity.The objects of excise taxation are excisable

goods and licenses to practice gambling activity stipulated in an Annex to Section IV (Excise

2Robert Baldwin Understanding Regulation

3Tax Code of RM


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improvements thereon buildings, structures, apartments and other isolated premises that

could not be moved without causing direct damage to their destination.The payers of the real

estate tax are considered to be the following resident and non-resident legal entities and

individuals:

- owners of real estate located in Moldova;

- holders of property rights to public real property located in Moldova, lessees leasing out

private real estate, unless the respective lease contracts provide otherwise.

The subject matter of the real estate tax comprises real estate, including land plots and/or

improvements thereon buildings, structures, apartments and other isolated premises,

including improvements, whose construction is finished by 80 or more percent, provided that

the construction has not been finished in the course of 5 years since the date of its

initiation.The tax base of the real estate tax constitutes 50 percent of assessed evaluation of

the real estate.Real estate is evaluated by regional cadastral authorities through the use of a

uniform methodology and specific methods in the procedure and terms stipulated byapplicable legislation.The maximum real estate tax rate constitutes 0.5 percent of the tax

base. Specific real estate tax rates are established each year by local public authorities and

may not be less than 50 percent of the maximum real estate tax rate stipulated above.The land

tax shall be assessed by way of multiplication of the specific land tax rate by the number of

point - hectares, hectares or areas of the land plot owned by the taxpayer and shall be

calculated and paid in the procedure stipulated by article 4 of the Law on Entry into Force of

Section VI of the Tax Code. Specific land tax rates are established on a yearly basis by local

public authorities upon approval of respective local budgets within the limits (maximum

rates) stipulated in Annexes 1 and 2 to the Law on Entry into Force of Section VI of the Tax

Code. Beginning January 1, 2006, the land tax will not be collected separately and will be

merged with the real estate tax.State and local taxes, duties and levies may be established,

modified or abolished exclusively by Parliament's introducing of respective modifications

and supplements to the Tax Code. It should also be mentioned that new taxes, duties and

levies may be established or existing taxes, duties and levies may be abolished or modified

during a tax (calendar) year in respect to the taxpayers, taxable subject matter, tax rates and

tax benefits, provided that the state budget law is simultaneously modified accordingly.

Article 5 of the Tax Code defines taxpayer as a person, who in accordance with the tax

legislation is obliged to calculate and/or pay to the budget any tax, duty or levy, respective

penalty or fine, or a person, who in accordance with the tax legislation is obliged to withhold

or collect from another person and pay to the budget any tax, duty or levy.Pursuant to the TaxCode, the taxpayer is entitled to:- obtain from the tax authorities free of charge any

information on existing taxes, duties and levies and regulations governing the procedure and

terms of their payment;- proper treatment by the tax authorities;- represent its interests in the

tax authorities in person or via an authorised representative;- receive and use established tax

benefits;- obtain deferrals, instalment payment plans, tax offsets in the procedure and terms

stipulated by applicable regulations;- provide the tax authorities with explanations regarding

the calculation and payment of taxes, duties and levies;- appeal in the established procedure

the decisions and actions of the tax authorities;- other rights established by the tax and other

legislation.The taxpayer is obliged to:comply with the procedure of state registration and

rules of practising business activity;- register as a taxpayer with the regional tax authorities

and obtain a certificate on attribution of the fiscal code, provide information about thelocation of its headquarters and structural subdivisions, branches and representative offices


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,maintain bookkeeping in the forms and in the procedure stipulated by the current legislation,

prepare and file with tax authorities respective bookkeeping documents;- declare its income

derived from practising any business activity and other taxable sources;- pay taxes, duties and

levies due in full and in a timely manner;- provide the tax and other competent authorities on

their request at the time of conducting tax controls with any documents and information

related to the business activity of the taxpayer, calculation and payment of taxes, duties andlevies;- ensure free access of the authorised personnel of the tax and other competent

authorities to taxpayer's premises at the time of conducting control of the taxpayer be present

at the time of conducting tax controls, sign acts of control and provide competent authorities

with oral and written explanations,provide respective documentary evidence in case of

erroneous calculation of any tax, penalty, fine or interest due;comply with the decisions of the

tax and other competent authorities made as a result of the control, provided that these

decisions do not contradict the current legislation,comply with other obligations stipulated by

the tax legislation.

Pursuant to Article 161 of the Tax Code, the tax authorities exercise state registration of the

taxpayer by way of assignment of fiscal code and maintenance of the tax registry.A fiscalcode is uniform number used for tax purposes. It is assigned only once, irrespective of the

provisions of the tax regulations concerning the establishment and discharge of taxobligations. A person, who was not assigned a fiscal code, may not be registered as a

taxpayer. The fiscal code of a resident or non-resident natural person is considered to be the

personal code indicated in its respective personal identification document.The State Tax

Registry is a public registry, which is created and maintained by the tax authorities and

contains information on fiscal codes assigned in accordance with tax regulations.The State

Tax Registry is updated by means of assignment and/or cancellation of fiscal codes as well as

modification of the data about the taxpayers registered in the Registry.The recording of the

taxpayer's fiscal code in the State Tax Registry confirms the tax registration of the taxpayer.


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Literature

Richard Wish Competition law

Robert Baldwin Understanding Regulation

Commentary of the Tax Code of RM

Jill Poole Case Book on Public law

Caracteristica Sistemului de Impozitare Al RM La Etapa Actuala

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