Andrei Zhizdan
In the previous issue of Logos Press, we reported on the main proposals of the Foreign Investors Association (FIA). Today – initiatives from the National Association of IT Companies (ATIC).
Now ATIC is consulting members of the tax committee, which has prepared several proposals concerning both taxation and regulation of business activities. More precisely, the removal of barriers to its conduct.
“When a foreign investor establishes a subsidiary company in Moldova, he has two possibilities to make investments: either through authorized capital or through a loan,” says Andrei Zhizdan, chairman of the organization’s tax committee. – As a rule, investors do not use the first method, because in case of possible liquidation of the company it generates additional difficulties and expenses. Most often they invest through a loan for a subsidiary”.
At the same time, according to the Moldovan legislation, a client or a company in Moldova cannot receive funds over 10 thousand euros without the so-called “notification” of the National Bank. Banks promise to meet the deadline in 10 days, but in practice this procedure takes about a month. Foreigners do not understand why there is a need for excessive bureaucracy when other countries in the region do not have such requirements.
“It is not clear what its purpose is in terms of market regulation,” he continues. – When funds are withdrawn abroad, this could still be understood. When funds are sent to Romania, the procedure takes one and a half to two months. The company has to prove again the origin of the money, although when a client deposits money into an account, it is checked. In addition, you have to show a preliminary report with proof that your income is equal to the amount that is in the account, although funds can accumulate over several periods and discrepancies can occur for various reasons. For example, large depreciation.
– It is clear that this is a way to reduce cash, which is good for the economy, but banks are so steeped in these procedures that, even if there is proof of certain amounts, the scrutiny is tough. At the same time, the Romanian side does not even look at this notification. We believe that this is a disadvantage for the investment process. Therefore, we propose to either increase the plafond for notification, because 10 thousand euros is not a lot of money today. Or leave it for individuals to avoid using it in politics. And for companies to increase it to 150 thousand euros”.
In addition, to adjust the norm in the Law on preventing and combating money laundering and terrorist financing. “One of the provisions of Article 5 of this law requires that banks identify the final beneficiary from a reliable source,” says Andrei Zhizdan. – They, in turn, require a document issued by a state body. The problem appears in companies whose parent company is located in the USA. There such a document is signed by the founder of the company. But our banks do not recognize it. Such companies cannot open a bank account. We suggest that this document could be signed either by an auditor or another specialist.
Members of the association propose to make clarifications to Article 71 of the Tax Code. According to the current provision, non-resident business and management consulting services are taxed only if they are rendered on the territory of Moldova. But this provision is vague, so interpretations are possible.
“Suppose a company has received the service of advertising in a social network, and it is shown on the territory of Moldova,” explains the specialist. – Accordingly, it has an obligation to withhold tax at source. But if this advertising is shown in Romania, then it should be clearly understood that there is no such obligation. Or a consulting company from Bucharest provides services in Moldova. If this happens through ZOOM, then it is considered that it does not take place on the territory of Moldova, and only if the consultant is physically present here, then the norm applies. There is no clarity in all these subtleties of the legislation. The article is full of general terms and one can only guess what is required of us. We have proposed certain changes, because now most companies are insured and ask for a certificate from a non-resident to protect themselves”.
Part of the association’s proposals are related to the new tax regime for freelancers. “We believe that it is necessary to supplement the very definition of the provision “independent activity”, – comments the specialist. – If an entrepreneur coordinates several individuals carrying out independent activities, initially not to consider him a freelancer. This is necessary to avoid the risk of tax optimization, when he acts not as an employer, but as a hub of freelancers. In this case, neither the state nor the employees lose. The idea is to make it clear: those who take optimization risks cannot be considered freelancers”.
At the stage of approval of the law, MP Radu Marian, at the request of ATIC, made a proposal to Article 24 of the Tax Code on certain restrictions on this regime. Namely: if a company spends more than 10% of its payroll for the whole year on freelancers, everything above this amount should be considered as salary and subject to all payroll taxes.
Members of the organization propose to adjust this provision. And also to return the old exemption for IT companies that are not residents of the park. It was valid until 2024 and concerned social fund and income tax payments. Today we have to register a separate outsourcing company and include it in the park to enjoy the single tax benefit. It is necessary to equalize the rights of all companies, according to representatives of the sector.
