Economic overview
On 1 November 2022, a new agreement between the EU and Moldova (or Moldova) entered into force, aimed at improving trade facilitation for businesses. This is an important step with the aim of strengthening the export capacity of Moldovan products to the EU market, of vital interest for companies. The adoption of this decision is a historic event, which, in fact, brings the Republic of Moldova even closer to the European Union. The country’s Authorized Economic Operators are recognized by all 27 EU Member States. It further increases the commercial opportunities and contributes to the smooth flow of goods between the two sides, without compromising the high safety standards.
At a time when businesses need all the support they can get to get through the ongoing crisis due to the war in Ukraine, the deal makes trade easier and cheaper for many traders. The EU is Moldova’s main trading partner, accounting for 52.2% of its total trade. EU exports to Moldova amounted to €3.8 billion in 2021.
The necessary steps for the adoption of the decision of the European Council in this regard were possible with the support of the European Union, through the Mission of the High Councilors of the EU. These included the assessment of national customs legislation and its alignment with that of the European Union, EU validation missions to Moldova, Romania and Germany, as well as the development of an IT platform, a complex data exchange system for the mutual recognition of AEOs, being the first link system between the customs authorities of Moldova and the EU Member States.
The launch event was attended by Prime Minister Natalia Gavrilița, the head of the EU delegation in Chişinău, Jānis Mažeiks, the high-level EU adviser, Rosario de Blasio and the head of the customs service Igor Talmazan. The Prime Minister of the Republic of Moldova said: “I am proud to be the first country in the region to obtain mutual recognition of authorized economic operators with the European Union. It is a status that has so far been achieved by much more developed countries, such as the United States of America, the United Kingdom, Norway, Switzerland or Japan. This result represents a strong sign of confidence in the government I lead, but also in the commitments we have made in the field of the fight against corruption. I hope, in this way, to increase the export capacity of Moldovan products on the European Union market, a desire that is even more important in the context of the difficult economic situation of the region”.
Main sectors of industry
Moldova is an agricultural-industrial country. Agriculture and industry contribute 37% to the formation of the Gross Domestic Product. The industry is concentrated in particular on the processing of agricultural raw materials, in addition it is represented by light industry, woodworking and the construction of machinery and equipment.
The agricultural sector has strategic importance for the Moldovan economy with an incidence of 10% in the formation of the gross domestic product and with the use of 33% of the country’s workforce. Agricultural products represent 40% of the value of exports (in particular wine products and fruit and vegetables).
The sector is characterized by a high parcelling of the land – a consequence of the agrarian reforms of the 1990s (60% of agricultural production comes from plots of no more than 10 hectares).
However, the economy largely depends on agriculture and its products: fruit, vegetables, wine and tobacco; raw materials are scarce. Moldova therefore has to import, mainly from Russia, oil, coal and natural gas. This lack of raw materials led to a rapid decline in production and therefore in the economy after the separation from the Soviet Union in 1991.
To implement an economic liberalization plan, Moldova introduced a new convertible currency, the leu (since 29 November 1993), liberalized all tariffs, stopped granting tax privileges to state-owned companies, privatized land, removed all state export controls and liberalized interest rates. Economic reforms in Moldova are supported by international economic and financial organizations.
Taxation for businesses in Moldavia
Companies are subject to worldwide taxation, which means that they pay taxes on income produced anywhere in the world. Although this is not a territorial legislation (typical of Anglo-Saxon regimes) it still offers great opportunities due to the low taxation of its companies.
In fact, the corporate income tax is only 12%. If, on the other hand, the company is small or medium (excluding farmers and sole proprietorships) and does not have a VAT number, it pays only 3%. In fact, in Moldova, as in many parts of the world, there are exemptions if the company invoices little. Under 600,000 Moldovan lei (29,000 euros) the company does not need to open a VAT number and receives important tax exemptions.
Farmers, on the other hand, always have a 7% tax, no matter how much their turnover is.
Sole proprietorships pay 7% if the annual turnover does not exceed 30,000 lei (1,500 euros) and 18% for all those with higher turnover.
In Moldavia ci sono delle zone economiche speciali, come frequentemente si vede nei paesi emergenti a basso reddito. Queste free economic zones sono: Port of Giurgiulesti, International Airport of Marculesti, Expo-Business-Chisinau, Ungheni-Business, Otaci-Business, Taraclia,Tvardita, Valkanes e Balti.
Ovviamente sono state create per accelerare la crescita economica ed attirare imprenditori da tutta Europa. Alcuni italiani ne hanno già approfittato soprattutto nella zona di Ungheni. I vantaggi di chi costituisce un’azienda in queste aree sono i seguenti:
- La riduzione dell’imposta sul reddito di impresa del 50% sui prodotti esportati fuori dalla Moldavia.
- Un’ulteriore riduzione dell’imposta sul reddito di impresa del 25% sull’intero ammontare del profitto (compresi i prodotti venduti in Moldavia)
- Tre anni di esenzione su tutti i profitti ottenuti dall’impresa localizzata nella zona economica speciale
Attenzione: anche le imprese non presenti nelle zone economiche speciali ricevono delle esenzioni sulla corporate tax (imposta sul reddito di impresa) se aumentano il numero dei dipendenti.
Per quanto riguarda il capital gain, secondo la fiscalità moldava si deve tassare solo la metà dell’ammontare totale del guadagno. La metà del guadagno viene tassata al 6%.
Quindi possiamo dire che l’imposta sul capital gain in Moldavia è sostanzialmente del 3%. Ottima notizia se oltre ad aprire la società intendi anche fare investimenti immobiliari in un paese che avrà una crescita molto veloce nel prossimo futuro.
Sui dividendi percepiti dai residenti e dai non residenti c’è un 6% di ritenuta d’acconto (withholding tax).
L’IVA moldava è del 20% quindi perfettamente in linea con gli altri paesi europei.
Investing in Moldavia
From a practical point of view, there are so many good reasons to invest in Moldova: environmental, fiscal, economic, logistical, but mainly by focusing on human resources. A foreign country still represents some discomfort, starting from the language, especially for those who go to work away from home for the first time. Knowing, therefore, that you will find cordial and helpful people, modern and open to relationships, with habits completely similar to ours, but less ‘raped by progress’: people, in short, who have not yet withered by modernity and globalization, can only reassure and please.
Young Moldovans are well prepared, skilled in new technologies, strong in an uncommon ability to adapt, ready to work at a fast pace. But the human aspect does not diminish the other reasons and, first of all, the possibility of making products at highly competitive prices compared to most developing countries. The particular economic situation of Moldova means that the average salary of a worker is today very low, albeit in the face of a great capacity and professionalism. The low cost of labour will prove to be the driving force behind an economic boom that we have already seen taking place in other parts of the world.
It is important that there is an immense market, represented by all those countries that were part of the Soviet Union and which today need a little bit of everything. Well, an already operational agreement allows the free trade of goods (therefore without any customs barrier) between Moldova and all the Independent States of the former U.S.S.R.
The Republic of Moldova thus becomes a privileged gateway to access the market of Eastern European countries, for the most part now oriented towards Western-type consumerism which will proceed hand in hand with internal well-being. Moldova, therefore, should be considered as a decentralized operational base in the East: a bridge launched towards the new outlet markets represented by the C.I.S. (Commonwealth of Independent States) from Russia.