Doing business in free economic zones in Moldova.
What are the advantages of doing business in free economic zones of Moldova?
Currently, a large number of countries in the world, including the Republic of Moldova, have created free economic zones to accelerate the economic development of regions, create new jobs and attract foreign investors who want to start a new business.
What is a free economic zone in Moldova?
In accordance with national law, free economic zones (free enterprise zones) are part of the customs territory of the Republic of Moldova, economically separated, with strictly demarcated perimeter, where for local and foreign investors, according to the law, are allowed on preferential conditions different types of business activities.
The territory of the free zone is protected by specialized enterprises of the Republic of Moldova on the basis of agreements concluded between them and the Administration of the free zone. The system of authorized passing of the free zone’s borders, of which manner of functioning is set by a decision of the Government, shall be applied for physical persons and transport means.
Who can become a resident of the free economic zones of Moldova?
A free zone resident can be any individual or legal entity registered as a business entity in the Republic of Moldova in accordance with the law, an educational institution, a center for scientific research and technology transfer, and other entities that contribute to improving the quality of the workforce of residents.
The selection of residents shall be implemented by the Administration on a contest basis, taking into consideration the amount and character of foreseen investments, the necessity of creation of a zone’s productive and non-productive infrastructure, the maintenance of the free zone oriented to fabrication of the industrial production for export, the free territory and land plots, the ensuring with workforce, water, energetic resources and other criteria.
What is the purpose of creating free economic zones in Moldova?
The free zones shall be created aiming the acceleration of the social and economic development of certain territories and of the country as a whole by:
a) attracting domestic and foreign investments;
b) implementing the modern technique and technology;
c) developing the export-oriented production;
d) applying the advanced experience in the field of production and management;
e) creating working places.
What types of activities can be carried out in the free economic zones of Moldova?
In the free economic zone may be carried out following types of activity:
а) industrial production of goods for export, except alcohol and alcohol products;
b) sorting, packaging, marking and other similar operations with goods transited through the customs territory of the Republic of Moldova;
b1) external trade;
с) auxiliary types of activities, such as utilities, storage, construction, catering, etc., necessary to conduct the above mentioned activities.
What norms of the law apply on the territory of free economic zones in Moldova?
On the territory of free economic zones acting:
a) international agreements to which Moldova is a party;
b) the law of the Republic of Moldova;
c) The Government’s decisions;
d) regulations of the Free Economic Zone Administration, taken within its competence, not inconsistent with law.
What advantages do free economic zones offer in Moldova?
In order to achieve agreed objectives, for Free economic zones, were granted preferential arrangements to stimulate entrepreneurial activity as well as lot of other benefits, such as:
• Investment within the Free econimic zones enjoy the legal protection of the state.
• Assets in free zones can not be expropriated, nationalized, requisitioned and confiscated, except by court decision.
• After payment of taxes, fees and other charges imposed by the laws, for foreign investors are guaranteed the right to transfer outside the Republic of Moldova amounts in foreign currency, obtained by them as profits (dividends), resulting from the sales of all or part of property belonging to them or a share of a resident enterprise, as well as the profit from liquidation or reorganization of the enterprise.
• Special customs treatment:
– 50% discount from the tax rate fixed in the RM for the income obtained from export of goods (services) originating from free economic zones outside the territory of the RM;
– 25% from the tax rate fixed by the RM for the income obtained from other activities than export of goods (services);
– 3- year total exemption from income tax obtained from export of goods (services) originating from free economic zones outside the territory of the RM following investment of at least 1 million US dollars in the free zone;
– 5-year total exemption from income tax obtained from export of goods (services) originated from the free economic zone outside the territory of the RM following investment of at least 5 million US dollars in the free zone;
– VAT is not applied to the goods delivered to the free zone;
– zero VAT rate for:
(1) goods (services) delivered to the free zone from outside the territory of the Republic of Moldova,
(2) goods (services) delivered from the free zone outside the territory of the Republic of Moldova,
(3) goods (services) delivered to the free zone from the rest of the territory of the Republic of Moldova,
(4) goods (services) delivered by residents of different free zones of the Republic of Moldova to each other;
– exemption from excise payment for:
(1) goods introduced in the free zone from outside the Republic of Moldova,
(2) from other free zones,
(3) from the rest of the territory of the Republic of Moldova,
(4) goods originating from this zone and exported outside the territory of the Republic of Moldova;
– Exemption from payment of excise taxes for:
(1) deliveries of goods within the free zone,
(2) deliveries of goods from one free zone to another are not subject to excise duties.
What are the free economic zones in Moldova?
In Moldova operating the following free economic zones:
• Free economic zone International Port of Giurgiulesti;
• Free economic zone International Airport of Marculesti;
• Free economic zone Expo-Business-Chisinau;
• Free economic zone Ungheni-Business;
• Free economic zone Otaci-Business;
• Free economic zone Taraclia;
• Free economic zone Tvardita;
• Free economic zone Valkanes;
• Free economic zone Balti.
The above is intended to provide a brief guide only. It is essential that appropriate professional advice is obtained. Our office will be glad to assist you in this respect. Please do not hesitate to contact us.