The warning was issued by the following associations: the National Association of Inbound and Outbound Tourism of Moldova (ANTRIM), the National Association of Restaurants and Entertainment Venues of the Republic of Moldova (MĂR), the National Association of Travel Agencies of Moldova (ANAT), the Moldovan Medical Tourism Association (MHAM), and the Dionysos Union of Small Winemakers.
During the press conference, industry representatives pointed out that certain provisions of the draft law amending a number of regulatory acts in the tax and customs spheres will directly affect the competitiveness of the tourism sector. Thus, the VAT increase will affect the entire tourism service chain: travel agencies, guesthouses, wineries, restaurants, and hotels within tourist complexes, as well as local producers, medical tourism, and related services.
“Tourism functions as an ecosystem. If prices for lodging and meals rise, the cost of a travel package automatically increases as well. And if Moldova becomes more expensive, it will be much harder for the country to compete with other destinations in the region. Our tourism offering risks becoming uncompetitive for foreign tourists, who constantly compare prices, service quality, and market conditions when choosing a vacation destination. “Instead of supporting the development of a sector that benefits the economy and promotes the Republic of Moldova abroad, we risk putting additional pressure on entrepreneurs and slowing the industry’s growth,” said Nicolae Olarasu, a lobbying and advocacy consultant for the National Association of Inbound and Domestic Tourism of Moldova (ANTRIM).
Olga Kalmish, executive director of the “MĂR” association, believes that “the restaurant industry is still feeling the effects of the economic and inflationary shocks of recent years and has not yet recovered to a level that would allow it to cope with new tax burdens. Higher taxes on food and beverages produced in the HoReCa segment will inevitably be reflected in prices for the end consumer, affecting demand, competitiveness, and investment in the sector. Experience in European countries shows that such measures do not lead to sustainable growth in budget revenues; on the contrary, they reduce taxable consumption, lower corporate profitability, and contribute to the expansion of the shadow economy. Therefore, fiscal policy should be based on economic analysis and best European practices, rather than on short-term budgetary goals.”
Industry representatives state that small and medium-sized enterprises, whose operations are seasonal and require constant investment to attract tourists and improve service quality, will be particularly hard hit by the legislative changes.
Unlike other sectors of the economy, tourism and the hospitality industry operate with low profit margins and high fixed costs. In many cases, profitability is concentrated over just a few months of the year, and any tax increase reduces operators’ ability to invest in infrastructure modernization, digitalization, staff training, and the development of new tourism products.
Elena Butakova, founder of the Hill&Valley agritourism complex: “I’d like to run a simulation to show how the new legislative changes will affect small businesses. When we started this business—which is not yet operating at full capacity—we estimated that an event at the complex would cost 100,000 lei, depending on the number of guests and the services provided; with VAT included, the total came to 108,000 lei. Now, tourists will have to pay 120,000 lei for the same services, which is more than we had planned. When we started this business, we drew up a business plan that we used to apply for loans and financing programs, but now we have zero predictability due to the VAT increase, which puts us in a very difficult position, and we risk either reducing our staff or cutting salaries, and, consequently, deviating from the business plan we used to apply for all loans and financing programs.”
Industry representatives are drawing attention to the social consequences of these changes. The hospitality sector employs about 27,000 people, mostly young people, and the new tax changes could lead to the layoff of approximately 5,000 employees. At the same time, according to estimates, tourism services could become about 30% more expensive, which will affect both local tourists and the Republic of Moldova’s appeal to foreign visitors.
Arkadie Fosnia, winemaker and president of the Coordination Council of the Association of Small Winemakers: “We have been in a crisis for six years now, which began with the pandemic, followed by the war in the region—a period during which we did not receive government support, as was the case in Romania or other countries in the region. In addition, we are in the process of preparing for EU accession, and the legal framework is changing daily and requires various investments. For example, the minimum wage also increased this year, and energy prices rose by 50%; accordingly, we received no compensation. These changes will affect both the company and consumers, and we are experiencing stagnation in our services and seeing how difficult it is for consumers to access tourism services. And these changes will reduce demand for these services not only on our part but also in terms of tourists’ spending. These tax issues further undermine our enthusiasm and passion, which is why we are asking that these approaches be reviewed.”
The associations that signed the agreement reaffirm their willingness to engage in constructive institutional dialogue with the authorities and demand that any changes to tax policy be preceded by a thorough economic assessment conducted in consultation with the business community. A predictable and competitive tax framework is one of the most important conditions for developing tourism, attracting investment, and strengthening the Republic of Moldova’s image as a tourist destination in the European market. Supporting the competitiveness of the hospitality industry is not a privilege granted to the economic sector, but rather an investment in the sustainable development of the national economy, in job creation, and in promoting the country abroad.
Mihail Bolgan, an economic expert, said: “Tax policy affects many sectors. Based on our analysis, we have reached a very clear conclusion: taxing a particular sector or type of activity does not necessarily lead to an increase in budget revenues, as planned. Thus, there is no linear relationship between a 10% tax increase and a 10% increase in budget revenue. The HoReCa sector, which has emerged from the ‘gray zone’—in part due to a reduction in VAT—is showing growth according to official data. In March, we presented a study—which also included data from consumers—showing that approximately 61% of the adult population as a whole visits HoReCa establishments and spends up to 1,000 lei. The most popular HoReCa establishments are restaurants and cafes, which are frequented especially by young people. In other words, the proposed changes will affect all residents of the country—a broad segment that will visit these establishments less often, order less, and choose cheaper items.”
Inbound tourism is particularly price-sensitive, and in this context, increases in the cost of lodging, meals, and tourist services could directly influence foreign tourists’ decision to choose the Republic of Moldova or not.
Tourism associations argue that any changes to taxation affecting tourism and the hotel industry must be discussed with industry operators and preceded by a thorough analysis of the economic consequences. Industry representatives are calling for dialogue with the authorities, a realistic transition period, and solutions that will not hinder the sector’s development.
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