- FEZ Intro
- Tax Benefits in FEZ
- Steps for FEZ setting up
- IP Intro
- Tax Benefits in IP
- Steps for IP setting up
Free economic zones (FEZ) are parts of the customs territory of the Republic of Moldova which are separated from the economic point of view, where local and foreign investors benefit from preferential treatment in practicing certain types of business activities, according to law provisions.
The concept of free economic zones (FEZ) was introduced in Moldova with the purpose of accelerating socioeconomic development of the economy in particular and of the country in general, by attracting local and foreign investment, promoting and supporting exports of goods and production, and creating employment.
Moldova has established seven free economic zones offering tax and customs benefits, as follows:
Additional, there are established two zones with a similar status:
- International Free Port of Giurgiulesti (situated 210 km to the south of the capital);
- Free International Airport of Marculesti (situated 126 km to the north of the capital).
Business activities allowed to be carried out in FEZs
- industrial production of goods which are export-oriented, except for ethyl alcohol and alcoholic production;
- sorting, packing, marking and other similar operations related to goods in transit regime (goods transported through the customs territory of the Republic of Moldova);
- external commercial activities (wholesale of goods imported to FEZs from outside the territory of the Republic of Moldova and delivered for export);
- transport activity – transportation of goods imported or exported through the free economic zone by means of air or marine transport;
- other auxiliary activities, including utilities, warehousing, construction, catering and others, necessary to support the business activities mentioned above.
The priority kind of activity to be carried out in FEZs should be industrial production.
The same time, the following activities are prohibited in FEZs:
- import of tobacco and tobacco items;
- production of tobacco items;
- production, transportation and storing armament;
- other activities prohibited by the Moldovan legislation.
Each FEZ is managed independently by an administrator who is appointed for 5 years by and the Government and establishes its own fees and charges. The FEZ residents have to be registered in Moldova as subjects of entrepreneurial activity (legal entities with local, mixed, or foreign capital) and must be selected by FEZ administration.
Each type of activity within the FEZ is subject to a separate time-limited authorization issued by the FEZ administration. The authorization perform activities in the FEZ does not exempt the FEZ resident from the obligation to obtain other licenses for performing certain activities required by law. Therefore, if a particular license is required for an activity, then the FEZ resident must obtain that license from the licensing authority, and only then obtain the authorization from FEZ administration.
Each FEZ has a customs office responsible for ensuring compliance with customs laws and procedures.
Corporate Income Tax (CIT) benefits in Free Economic Zones
|FEZs||Rest of the country|
|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, or for the income obtained from delivery of goods (services) produced in FEZ to other residents of free economic zones for goods (services) export-oriented||12% from taxable income|
|25% from the tax rate fixed by the RM for the income obtained from other activities than export of goods (services);||12% from taxable income|
|the FEZ residents which invested in the fixed assets of their companies or in the development of the FEZ infrastructure at least 1 million USD, benefit from a tax exemption for the incomes obtained from export of goods or services outside the customs territory of the Republic of Moldova, as well as for the incomes obtained from the delivery of goods or services (produced in the FEZ) to other residents of FEZ for the goods or services oriented to the export, during a 3-years term||12% from taxable income|
|the FEZ residents which invested in the fixed assets of their companies or in the development of the FEZ infrastructure at least 5 million USD, benefit from a tax exemption for the incomes obtained from export of goods or services outside the customs territory of the Republic of Moldova, as well as for the incomes obtained from the delivery of goods or services (produced in the FEZ) to other residents of FEZ for the goods or services oriented to the export, during a 5-years term||12% from taxable income|
Value Added Tax (VAT) benefits in Free Economic Zones
|FEZs||Rest of the country|
|Zero (0%) VAT rate for: |
The delivery of goods or services within the FEZ are not subject of VAT taxation.
Excise benefits in Free Economic Zones
|FEZs||Rest of the country|
|exemption from excise payment for:|
Deliveries of goods within the free zone, and deliveries of goods from one free zone to another are not subject to excise duties.
|According to the legislation (unit|
and ad-valorem excises)
Custom Duties benefits in Free Economic Zones
Goods originating from the FEZ and exported from FEZ to the rest of the customs territory of the Republic of Moldova or abroad are exempt from any customs duties, except for the customs processing fee. Goods imported to FEZ from the rest of the customs territory of the Republic of Moldova or from abroad are exempt from any customs duties, except for the customs processing fee.
The main advantage for residents of zones derives from the presence of the customs office. High frequency interactions between residents and customs officials resulted in a constructive and beneficial environment. Most of the residents’ transactions are considered low risk by default, and as a result, 95 percent of declarations are given green-line treatment, making the clearing process of imports and exports quick and easy. Customs generally processes all documents within 45 minutes and this can be tracked online.
The main advantages provided by FEZ
legal protection provided by state for investments in free economic zones (FEZ);
- legal status of FEZs is regulated by the law adopted by the Parliament and could be modified by the Parliament only;
- the law guarantees the application of the current legislation within 10 years from the moment of registration as a FEZ resident;
- possibility to transfer profit abroad;
- preferential tax and customs treatment for stimulation of business activities;
- the law guarantees the impossibility of expropriation, nationalization, requisition and confiscation of assets from FEZs except than by court decision;
- the Moldovan labor market offers cheap and qualified labor force;
- FEZs offers the possibility to use the existent infrastructure;
- free circulation of goods and services situated in FEZ;
- possibility to transmit goods (services) situated in FEZ from one resident to another without drawing up a customs declaration.
Steps to be followed in order to become a FEZ resident
Resident of FEZ may be any individual or legal entity registered under the law as a subject of entrepreneurial activity in the Republic of Moldova.
In order to obtain the residency status of a Free Economic Zone, the candidates must participate in the competition and must submit proposals to the FEZ administration in two copies (in the state language, Russian or English), including:
- the request addressed to FEZ Administrator, regarding the admission to the competition;
- copies of registration certificate as a subject of entrepreneurial activity in Moldova, issued by the State Registration Chamber or letter of guarantee regarding the establishment and registration of legal entity in case of overcoming the competition;
- copy of the document confirming the payment of the fee for competition participation;
- investment project or business plan for 2-3 years;
- intention to participate in development planning (infrastructure) of FEZ in accordance with the conditions of the competition or the list of priority items proposed by the Administration;
- name and surname of persons authorized to act on behalf of participants in the competition and sign legal documents;
- brief information about the participant;
- copy of the balance sheet for the last year of activity;
- sponsorship opportunities;
- candidates who own no property in the FEZ will present a pre-contract where have to be stipulated the rent conditions, while the candidates who own property in the FEZ will present the ownership documents.
During the time, the free economic zones (FEZ) have been successful in attracting investments from both local and foreign sources. Statistics data suggests that the free economic zones (FEZ) have significantly contributed to the diversification of exports of goods and services. In general, FEZs are successful in changing the structure of the Moldovan economy. FEZs have become true export platforms, generating a significant increase in exported industrial production from the zones. The impact of FEZs on local companies appears to be modest and insignificant, however, and finally do not contribute to the technological upgrading and sophistication of the Moldovan economy.
FEZs are successful in attracting industrial activities requiring intensive use of human capital for certain operations. The economic effect of free economic zones on Moldovan economy is ambiguous. Moldovan legislation related to FEZs provides sound and transparent provisions, but the main problem is how this legislation provisions are implemented by local authorities.
According to Law no.182 on Industrial Parks dated 15.07.2010, an industrial park is a bounded territory with technical and production infrastructure, where economic activities, mainly industrial production, provision of services, employment of scientific researches and / or technological development, may be carried out, benefitting of specific incentives. The purpose of industrial parks (IP) is to capitalize the human material potential of the respective region.
Industrial parks allow:
- low costs and reduced terms for setting-up big production activities;
- reduced prices for land rent and purchase of land at normative price;
- support regarding dealing with licenses, permits and approvals;
- access to transportation ways;
- developed infrastructure and connection to public utilities.
IP Residents and IP Administration can benefit of the following real estate incentives and Government support:
- exemption from compensating the losses caused by the exclusion of land from the category of land with agricultural destination, according to the Law on the normative price and the procedure for sale and purchase of land;
- alienation or transfer into commodatum of the administrator-enterprise’s public property assets in order to establish and develop the industrial park is free of charge, upon the decision of the owner of such assets, according to the Law on administration and deetatization of public property;
- the right to privatize the public property land related with constructions, at the land normative price;
- the administrator-enterprise of the industrial park can apply the diminution coefficient down to 0.3 of the tariff established for the annual rent payment for the public property land, or of the basic tariffs for the annual rent of the public property assets, established by the Law on the State Budget for the respective year;
- optimization of state controls – the planned state controls over the activity of the industrial park residents should be carried out according to an annual timeline, approved via the Government Decision, while the unplanned controls should be carried out according to the legislation in force, with the approval of the Ministry of Economy;
- allocation of financial funds for the creation of technical and production infrastructure;
- the investment projects carried out within industrial parks should be overseen by the Council for promoting investment projects of national importance.
In order to obtain the industrial park there have to be drawn up the following documents:
- copies of the founding documents of the applicant to obtain the title of industrial park (administrator-enterprise);
- copies of documents that confirm the right of possession for at least 30 years or ownership right over the land and buildings aimed for the establishment of the industrial park (IP);
- location chart of land aimed for creation of the industrial park;
- the statement (declaration) of the holder or owner of the land regarding the fulfillment of conditions required by law (mentioned in Land lot identification);
- approvals acceptances from holders of public utility networks;
- cadastral file regarding the change of land destination or authorization for the construction of object;
- approval and acceptance of the local authority in whose jurisdiction the land for the industrial park is situated;
- the feasibility study regarding the establishment of the industrial park.
In order to meet the requirements mentioned above, there have to be the applicant has to walk through the following phases:
PHASE 1. Land lot identification
The applicant have to find the land aimed for the establishment of the industrial park (IP) together with buildings and utilities situated on it, that cumulatively meet the following requirements:
- be free from any encumbrances;
- not to represent the subject of pending litigation and / or settlement in courts or arbitration;
- the land should have access to transportation routes;
- there have to be possibilities to connect the technical and production IP infrastructure to public utilities;
- the land surface has to be of at least 5 hectares.
PHASE 2. Identifying or creation of the administrator-enterprise
The applicant for the establishment of an industrial park has be an enterprise registered as a subject of entrepreneurial activity in Moldova, which has land in possession for at least 30 years or ownership right over the land and buildings aimed for the establishment of the industrial park (IP).
PHASE 3. Submission of documents
Application and the required documents for obtaining the status of industrial park should be submitted to the Ministry of Economy for being reviewed.
PHASE 4. Obtaining the status of an industrial park (IP)
The Ministry of Economy examines the set of submitted documents within 30 days. Alter issuing a positive notice, the Ministry of Economy should submit to the Government for approval the draft decision on granting the industrial park status to the applicant which will take over the functions of administrator enterprise.
There are feasibility studies, regarding the places suitable for the establishment of industrial parks (Edinet, Falesti, Balti, Hincesti, Cantemir, Cainari).
All the studies are available at the: http://www.mec.gov.md/ro/content/parcuri-industriale