Parliament activity, March 1-5, 2004
10 March 2004
During the aforesaid period MPs examined a string of draft laws. Opposition and majority faction deputies alike argued against the draft laws under consideration. Some of them shall be considered in greater detail below.
I. Law on the modification and completion of legal acts on retirement and social care
ADEPT Comment: Parliament decided on privileged terms of retirement for women who gave birth and raised until the age of eight, five or more children. Those women may retire at the age of 54. In addition, privileged terms were set for persons working under harmful or difficult conditions, retirement age for men being 54 and for women 49. The legal framework regulating retirement has been completed with a single norm providing that minimal work experience in order to qualify for age pension would be no less than 30 years.
The Law on Veterans was completed with provisions on supplements to pensions for special merits to all categories of veterans, including those who retired from military forces.
II. Draft law on offshore tax
ADEPT Comment: Under the draft a 15% offshore tax payable to the state budget shall be levied. The list of offshore zones shall be approved via a Government ruling at the recommendation of the National Bank of Moldova. Subjects to the law are residents of the Republic of Moldova, natural entities that carry entrepreneurial activity and legal entities. The following shall be subject to the tax:
- payments/ transfers of money made by residents to any non-resident of the Republic of Moldova registered in offshore, or through them to a bank account opened in an offshore zone;
- payments/ transfers of money to residents, via residents, into bank accounts opened in offshore zones;
- non-monetary obligations to non-residents registered in offshore zones;
- transferring patrimonial rights and/or liabilities, when one of the parties is resident and another is non-resident registered in offshore.
The law also provides for the transactions exempted from the tax.
Lawmakers argued that the law was necessary due to the fact that offshore zones allow for capital outflow from the country, money laundering and tax evasion. European community recommends refraining from transactions via offshore and toughening legal provisions in this respect.
Previously, under the Law no. 633-XV of November 15, 2001 on Fighting Money Laundering transactions with one of the parties being offshore resident, or transactions via offshore bank accounts were deemed suspicious.
The law garnered a rich harvest of criticism, in particular that the law would skyrocket prices on various goods (it is estimated that around 80% of the oil transactions are made via offshore). Another source of criticism was the fact that it would affect domestic entrepreneurs, as they have to work with foreign enterprises, which prefer to operate offshore and care little about Moldovan legislation. Also, offshore tax would affect financial institutions operating in Moldova, therefore entrepreneurs would have to resort to shadow schemes of doing business.
Noteworthy, several years ago the idea of establishing an offshore or free enterprise zone on the soil of the Republic of Moldova was largely debated and was viewed as a means of attracting foreign capital. However, the talks never materialised. Now we see that Government had to resort to opposite measures.
Having said that, it is worth mentioning the real causes of the amendments:
- Strong interests of economic groups close to power to limit the activity of their competitors and reorient capital flows towards banking institutions under their control - this however is a subjective version;
- Need to conform with EU recommendations requiring decisive actions to be taken in order to proceed to the negotiation of an EU - Republic of Moldova action plan.
III. Draft law on phyto-sanitary and fertilising products
ADEPT Comment: The draft is aimed at protecting plants from various diseases in order to secure favourable conditions for sustainable development of agriculture. Due to the financial crisis the country is going through, farmers cannot purchase such products, which in turn has a negative effect on the quality and quantity of their agricultural products as well as their competitiveness on the market. The great majority of phyto-sanitary and fertilising products are imported, therefore it is important to protect the domestic market. The draft law establishes the legal framework, defines the state policy in the field, legal terms of research and experiments in the field, production, import, sale, shipment, storage and safe usage of phyto-sanitary and fertilising products.
IV. Draft law on the modification of the Law on tobacco and tobacco products
ADEPT Comment: Under the draft, tobacco and tobacco products manufactured, imported or sold by violating the law provisions shall be confiscated based on a court ruling. Afterwards they could be sold via tender on condition the tobacco meets the required standards. If the tobacco products cannot be certified and brought in accordance with the legal requirements they will be destroyed. Great many deputies objected those amendments. They argued that those amendments would boost abuses and legalization of products failing to meet the legal requirements. Another objection referred to the fact that the current system did not allow for the certification of tobacco products, which might prove to be harmful to the smokers health.
Nevertheless, the arguments brought by the Government that the draft is aimed at protecting domestic producers and securing additional revenues to the state budget prevailed over the subjective and objective criticism voiced by the deputies. Finally, the draft was approved in the first reading.
V. Draft law on the modification of the Law on taking goods in and out of the country by natural entities
ADEPT Comment: In order to liberalize exports and facilitate the entrance of citizens residing abroad into the country, Government proposed several modifications to the law that would allow:
- bringing into the country cars in use for more than 10 years: for at most 45 days, provided a money deposit is made at the customs checking point equal to twice the amount of import taxes due under the law;
- increasing the amount of goods that could be taken out by natural entities abroad from 2,000 Euro to 100,000 Euro.
The latter raised a lot of criticism. Great many deputies argued that it would encourage capital outflow from the country. Deputies considered that the arguments on the need of liberalizing exports were exaggerated (estimated at around 1.5 million Lei) and that there were very few of those in Moldova who would take out of the country this type of goods. As those arguments were quite reasonable, deputies decided to reconsider the amount and considerably drop it during the next reading of the law.