Many countries in the region such as Bulgaria, Romania and Austria have opted to reduce the VAT rate in the HORECA sector either for a specified period, for example from 2020 to 2021, or for an unlimited period.

In the middle of 2020, the Secretariat of the Economic Council supported by the EBRD, the UK Government’s Good Governance Fund, and the International Finance Corporation prepares the Impact Study of the COVID pandemic on the economic sectors and the Policy Matrix. During this exercise, the experts spoke directly with representatives of economic sectors, including HORECA. One of the demands of companies in this field was to reduce the VAT rate.

Thus, the experts proposed in the Matrix with policies for the recovery of economic sectors, the reduction of the VAT rate for HORECA from 15% to 12%.

In 2019 the Parliament reduced the VAT rate for HORECA from 20% to 10%. According to the conclusions of the Impact Study of the COVID pandemic on the economic sectors and the Matrix with policies, the HORECA sector registered in 2019 double revenues from sales – from 215 to 469 million lei. Moreover, this measure contributed to the start of the process of “whitening” the sector, substantially increasing sales through accounting. Subsequently, the VAT rate was increased again, reaching 15% this year.

The deadline for applying these facilities expires in 2020. The business associations in the field addressed this topic during the elaboration by the Secretariat of the Economic Council of the Impact Study of the COVID-19 pandemic on the economic sectors. The document was supported by the EBRD, UK Government’s Good Governance Fund and the International Finance Corporation.

Within this research, a Matrix with economic recovery policies was developed. Among the proposed measures is the extension of the application of the fiscal facilities to the income tax provided for the employees whose basic activity is “realization of programs”, approved by Parliament.

These benefits will be reflected on about 1000 non-resident IT companies of the IT park with about 6000 employees. The turnover of these companies amounts to about 3 billion lei.

The government is taking such action to ensure a predictable business environment and ensure a favorable investment climate in the information technology industry, but also because it wants to help increase the number of these specialists in Moldova.

The total amount of revenues from the provision of ICT services in 2019 is 860 million US dollars. There are 1,687 companies operating in the Moldovan IT industry.

In the summer of 2020, the Secretariat of the Economic Council prepared the Impact Study of the COVID pandemic on the economic sectors and the Policy Matrix.

In this document, developed based on the recommendations of the business community, it was proposed to fully deduct and disregard as a facility granted by the employer the expenses incurred by the company to ensure the fight against COVID or ensure compliance with the rules to prevent the spread of COVID.

According to the experts from the Secretariat of the Economic Council, who proposed this measure, in the process of elaborating the Policy Matrix within the Study of the impact of the COVID pandemic on the economic sectors, the business community noticed a series of obstacles in applying the legal provisions. performed by PMs. According to economic agents, the deadline for publishing financial statements and audit reports is too short – 120 days from the last day of the management period. In order to comply with the terms established by law, companies were put in a position to incur considerable expenses for the services of audit companies that became more expensive during the reporting season, being assaulted by a large number of economic agents.

Now companies will breathe easier, the deadline to submit these documents has been extended by 30 days. Thus, the presentation of the financial situation and the audit report for the economic agents will be made within 150 days from the last day of the management period.

According to Alina Andronache, representative of the Partnership for Development Center, the opening of children’s centers inside the companies would encourage women to return to work until the expiration of maternity leave.

And the problem only intensified and worsened during the pandemic period. The companies found themselves in a situation where they simply did not have anyone to work with. Employees prefer to be technically unemployed so as not to leave their children alone at home during this period.

Since 2014, the Development Partnership Center has been researching the situation, including from an international practice perspective, and has come up with several proposals that would allow companies to set up early education centers for employees’ children. Namely, the creation of a special regime through which to allow the establishment of a service or center with a partial program of activity; founding a new legal entity; granting nursery vouchers and establishing public-private partnership in the field of educational services.

The Partnership Center for Development intends to discuss these options on the platform of the Economic Council in the context of the proposal of the Secretariat of the Economic Council to identify and implement optimal solutions to support employees with children in the closure of kindergartens and schools.

This proposal is part of the Policy Matrix developed by the experts of the Secretariat of the Economic Council in the COVID-19 Pandemic Impact Study on economic sectors. Among other things, it is proposed to create a regulatory framework, including by providing fiscal facilities to businesses in the creation of preschool educational service centers. It is also proposed to cover expenses in this regard, which would allow parents to remain active in the labor market.

The document was elaborated based on the consultation of over 20 representatives from diverse economic sectors, as well as public authorities. The COVID-19 matrix pointed out the problems specific to the national economy’s sectors and also comes up with preliminary measures of overcoming the crisis.

According to official statistics, the overwhelming majority of the sectors face a decrease in sales, counteracted by reducing staff, postponing investments, decrease in budgets for marketing and promotion.

The matrix implies three types of actions needed to be implemented, in order to back an economic balance. The first measure sees the optimization of the normative framework, which includes 14 measures with major economic impact and which will bring about 57.5 million lei to the budget.

Thus, decision-makers are set to digitalize the economy, simplify the authorizations in constructions, export certificates, etc.

The second measure provides for adjustings to the taxation regime. Experts included here proposals which regard the elimination of distortions from the value chain in agriculture, reducing the shadow economy, facilities in young people’s employment.

The last string deals with economic stimuli and comprises 17 measures. They regard the offering of a larger volume of state guarantees, boosting the First Home programme, agricultural subsidies, irrigation systems, etc.

The PM said that the cabinet did its utmost to come up with measures of supporting economic agents where there is urgent need, as well as with diverse social measures, investments in infrastructure and providing opportunities to young people.

„We want to encourage the employment of young people, including those who return from the Diaspora. In this respect, we will further maintain the mechanism of subsidization for the sectors worst hit by the pandemic. If the person gets employed, the economic agent receives from the state budget 50 per cent of the payments related to the salary for each employee in next 12 months. In the case of employment of disabled people, 100 per cent is subsidized from the state budget,’’ the prime minister said.

Ion Chicu appreciated the work of economic experts and asked to continue discussions with concerned institutions on the measures provided for in the document. ‘’Thank you for the huge support you provided through the working out of this study. We must do so that a good deal of these proposals be materialized and implemented. We should find a middle way, which would ensure the budgetary balance, as well as the economic one,’’ the prime minister said.

The PM also said that some of the already accepted proposals would be included in the fiscal and budgetary policy for 2021.

The study of impact of the COVID-19 pandemic is carried out by the Economic Council jointly with the Economics and Infrastructure Ministry, with the support of the European Bank for Reconstruction and Development, UK Government’s Good Governance Fund and the International Finance Corporation.

Investors were acquainted with the main purpose of the research which is to develop those solutions that need to be implemented immediately to help Moldovan business navigate the second wave of COVID. These measures, developed in coordination with the Ministry of Economy and Infrastructure, with the support and expertise of Moldova’s development partners, such as the European Bank for Reconstruction and Development, UK Government’s Good Governance Fund and the International Finance Corporation, will be proposed for discussion with state authorities on the platform of the Economic Council, within which it will be decided which of the measures are to be implemented.

During the event, the experts of the Secretariat of the Economic Council also mentioned the way of communicating the members of the platform with the state authorities, from the establishment of the State of Emergency until now. In this context, the experts of the Secretariat wanted to mention that the measures in the COVID Matrix are strongly supported by the business community, findings from the Study being taken into account in developing the post-COVID State Plan on which the Ministry of Economy and Infrastructure works.

The Gagauzia 2020 International Investment Forum discusses new challenges and models of economic cooperation in conditions of coronavirus pandemic, investment opportunities and development prospects of the Gagauzia region, measures to improve the business climate and attract investments. The event was attended by the Prime Minister of the Republic of Moldova, the Bashkan of Gagauzia and members of the Government.

According to experts, the pandemic mainly affected the automotive industries, HoReCa, trade and furniture manufacturing.

The research also shows sectors that have a substantial contribution to the country’s economic development. These include the automotive, textile, chemicals and chemical products, the fruit, vegetable and cereal production sectors.

Sectors that could navigate a new wave of COVID without being severely affected by financial parameters are IT, electrical equipment manufacturers, certain sectors of agriculture such as fruit, vegetables and cereals, the manufacture of vegetable and animal oils and fats.

In order to adapt to the new economic conditions, the authorities need to take a series of urgent measures.

Among them the implementation of the Digitization Roadmap of the economy; improving and adopting the draft Code of Urbanism and Constructions, removing the constraints from the construction legislation; signing new international free trade agreements; implementation of quality requirements for the export of agri-food products; VAT standardization in agriculture and e-commerce facilities, etc.

All these measures will also have an implementation solution. The experts are working on the necessary legislative and normative amendments that will be presented for coordination and approval to the Government and Parliament.

The COVID matrix is developed within the COVID-19 pandemic impact study on economic sectors conducted by the Secretariat of the Economic Council jointly with the Ministry of Economy and Infrastructure, with the support of the European Bank for Reconstruction and Development and the UK Government’s Good Governance Fund.

The document will also be subject to public debate during September.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund, and the International Finance Corporation’s Investment Climate Reform Project funded by the Government of Sweden’s International Development Agency.

HoReCa representatives need predictability in the process of applying business rules during a pandemic crisis. A plan should be developed that outlined how the rules were applied based on the incidence of COVID-19.
The retail sector has the same desire.

The builders are demanding a revision of the procurement law and securing payments from the state. Representatives of the transport industry spoke about the need to reimburse the cost of excise taxes on diesel fuel.

All these requests of the business are inserted by the experts from the Economic Council in the Anticovid-19 Matrix which is elaborated within the Study of the impact of the COVID-19 pandemic on the sectors of the economy.

Discussions with the business will continue, and recommendations from the Anticovid-19 Matrix will be made in September 2020.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund, and the International Finance Corporation’s Investment Climate Reform Project funded by the Government of Sweden’s International Development Agency.

Researchers collect information from the first source. Thus, the experts have already held talks with representatives from different sectors of the economy – textiles, tourism, winemakers, milk and meat producers, IT and financial-banking sectors.

Preliminary discussions with business representatives reveal that some sectors need financial support, others state intervention in ensuring the market for products and services, but also in removing major constraints.

All these requests of the business are inserted by the experts from the Economic Council in the Anticovid-19 Matrix which is elaborated within the Study of the impact of the COVID-19 pandemic on the sectors of the economy.

Discussions with the business will continue, and recommendations from the Anticovid-19 Matrix will be made in September 2020.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund, and the International Finance Corporation’s Investment Climate Reform Project funded by the Government of Sweden’s International Development Agency.