Moldova Government Plans Major Deregulation Measures for Businesses

Vasile Tofan

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The draft proposals are currently in the final stage of approval at the Ministry of Justice and the National Anti-Corruption Centre and are due to be submitted for approval shortly.

The authorities are also analysing around 80 authorisation documents to determine which of them can be abolished or replaced by a notification or a voluntary declaration of compliance.

In addition, 172 authorisation procedures have been identified that are not included in the statutory List of Authorisation Documents. It is proposed that these should either be justified and included in the list, or converted into notification procedures.

Currently, 19 regulatory bodies, 36 bodies authorised to hear cases of administrative offences, and five investigative bodies may intervene in economic activity. More than 300 articles on administrative offences and over 80 articles of the Criminal Code may be applied in relation to economic activity.

A separate proposal is to reform the tax audit system. At present, scheduled audits account for around 4 per cent of the total annual number. According to the government, this reduces predictability for businesses and creates a risk of excessive pressure from regulatory authorities.

What will change for businesses

The proposed measures do not envisage any lowering of standards in the areas of health, safety, the environment or consumer protection. The focus is primarily on eliminating repetitive procedures, documentation and permits.

In particular, for small-scale agro-industrial and energy investments outside built-up areas, it is proposed to simplify the town-planning procedure without waiving technical, environmental or cultural heritage requirements.

At present, for example, obtaining a planning certificate for the design of a simple agricultural structure – such as a cold store, hangar or warehouse – outside a built-up area without an approved master plan may involve no fewer than 26 consecutive administrative stages. In total, the procedure takes at least 7–12 months, and 10–15 months if an environmental impact assessment is required.

It is proposed that sanitary and veterinary permits and food safety registration certificates be made indefinite, provided that the renewal of a lease agreement is not accompanied by a change in the nature of the business or the relevant conditions.

It is also proposed that staffing plans be made optional. Companies will be able to use them at their discretion, but this internal formality will no longer be mandatory for all employers.

If the law permits a business to commence operations following the submission of a notification, the entrepreneur will not have to wait for a separate certificate, which merely confirms the fact that the notification has been submitted.

Less paperwork

Documents and training relating to health and safety can be processed electronically, including the provision of online training with an electronic signature. This will make it possible to eliminate a significant proportion of paper-based document flow.

For small businesses with a low fire risk, it is proposed to introduce simpler requirements than for those with a high level of risk.

What will change in the construction sector

In the construction sector, investors will no longer be required to collect permits and approvals from various authorities themselves. In particular, it is proposed that approvals from cultural heritage authorities, where required, be obtained through inter-departmental cooperation.

There are also plans to consolidate the procedures for obtaining planning permission for a building and its associated utility networks. At present, in some cases, these undergo separate and sequential procedures, despite being part of a single investment.

Investors will be able, if they wish, to undergo a preliminary review of the urban planning concept even before detailed design work begins. This will make it possible to ascertain in advance whether there are any fundamental obstacles, before spending money on a full-scale project.

If a public authority fails to consider an application for an urban planning certificate or a building permit within the prescribed time limit, or unreasonably refuses to issue it, it is proposed to establish an administrative mechanism to resolve the deadlock without the entrepreneur being obliged to take the matter to court.

It is proposed that wine-making registers be maintained directly within the existing information system, without the need to duplicate them on paper in the form of numbered, bound and signed pages.

European standards instead of repeat inspections

For medical laboratories, it is proposed that relevant accreditation obtained from a body recognised within the European accreditation system be recognised. In such cases, laboratories would not have to prove compliance with the same standards again through a similar national procedure.

Another proposal concerns the yellow registration plates used on vehicles for passenger transport. The Government considers that these create additional costs and administrative procedures without improving passenger safety. It is therefore proposed to abolish this requirement and switch to standard registration plates.

Forms relating to cash registers and monitoring equipment will also be simplified. It is proposed to remove the requirement to complete fields that have no practical significance in a given situation.

When awarding certain tourism subsidies, a classification certificate will no longer be required in cases where the legislation does not, in fact, stipulate mandatory classification of the relevant facility.

Changes to the inspection system

The second package of proposals concerns state oversight. The main principle is that businesses with a low level of risk and a good track record of compliance should not be inspected as frequently as those posing a high risk or with a history of repeated breaches.

Between 22 July and 6 September, more than 200 submissions were received at the government’s dedicated address for feedback from businesses. Of these, 63 related directly to regulatory barriers, bureaucratic procedures or sector-specific charges, whilst 38 concerned government inspections. Almost 74 per cent of the complaints relating to inspections concerned two bodies – the State Tax Service and the National Food Safety Agency (ANSA).

What do business owners complain about most often?

Among the most frequent complaints are unannounced or repeated tax inspections, assessments and fines deemed disproportionate by business owners, excessive requirements imposed on small producers, delays in obtaining environmental, health and building permits, duplication of reporting, and requests for documents or data that business owners consider unnecessary.

At the same time, the Prime Minister emphasised that a complaint in itself does not automatically mean that a government body has broken the rules or that the company is in the right. However, statistics help to identify the areas where the greatest number of problems arise.

Scheduled inspections are to be carried out on a risk-based basis

Unannounced inspections will continue in cases where there is a real risk, signs of fraud or a threat to people. The government proposes to increase the number of scheduled inspections carried out on the basis of risk assessment.

For tax audits, the plan is to draw up a clear annual plan, publish a risk classification methodology and integrate the plan into the State Register of Audits. Additional and unannounced audits should be the exception and must be justified.

It is also proposed to set clearer limits on the duration and frequency of audits. Their number and duration should depend on the taxpayer’s risk level and the potential damage.

It is planned to introduce checklists for tax audits so that businesses understand in advance exactly what the inspector is checking, what documents they may request, and how serious each breach is considered to be.

It is also proposed to reduce the number of documents required during an audit and to integrate key procedural data into the Audit Register.

For minor breaches, taxpayers will first be given the opportunity to rectify the situation

Violations that can be quickly rectified and do not pose an immediate threat should, as a rule, be rectified first, rather than automatically leading to disproportionate sanctions.

At the same time, there are plans to review vague regulations, overlaps between different provisions, and cases where the same violation can result in significantly different penalties.

The State Register of Inspections should serve as a tool for monitoring not only businesses but also the inspectors themselves. There are plans to expand it to facilitate data sharing, identify duplicate inspections and automatically detect potential procedural breaches.

It is also proposed that the effectiveness of government agencies should not be assessed solely on the basis of the amount of money recovered as a result of inspections. Instead, performance indicators should take into account risk reduction, compliance with procedures and an increase in voluntary compliance with legislation.

The government also intends to publish comparable performance indicators for regulatory bodies: the number of scheduled and unannounced inspections, the number of companies inspected, sanctions, suspensions of operations, complaints and adherence to established procedures.

It is proposed that complaints from businesses regarding unjustified inspections or interference by state bodies be analysed systematically, rather than being treated solely as isolated cases.

What happens next

The deregulation packages are currently in the final stage of review. Following this, changes falling within the government’s remit will be submitted to it for consideration. The government intends to approve the legislative amendments and submit them to parliament. However, during the review process, individual proposals may be amended or excluded.

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