Moldovan parliament speaker says single value-added tax would reduce tax optimization, compensations to go directly to citizens

The introduction of a single value added tax (VAT) rate and the replacement of tax incentives with direct compensation mechanisms for citizens are among the solutions examined by the authorities, in order to make the tax system more efficient and enhance transparency. Parliament Speaker Igor Grosu has made statements to this effect.

According to the speaker, the existence of more VAT rates creates conditions for “tax optimization” practices, which do not always produce beneficial effects for the economy.

“Having more types of VAT – 0%, 8% and 20% – it is well known that various ideas for tax optimization appear. These optimizations do not always lead to good outcomes,” said Igor Grosu.

The parliament speaker noted that the Finance Ministry was proposing the application of a single VAT rate, along with the introduction of an efficient mechanism for the quick refund of the tax to economic agents.

“The Ministry’s proposal is to have a single VAT and to guarantee a mechanism through which the tax is refunded quickly. The economic agent must have the money available for operations and investments,” Grosu specified.

At the same time, the official stressed that the authorities were holding consultations with representatives of more economic sectors, including farmers and the business community, in order to assess the impact of the changes proposed.

“People in agriculture have presented their arguments to us. We will analyze all comments and model different scenarios together with the competent ministry,” said the parliament speaker.

Igor Grosu advocated moving from a system of general tax facilities to targeted support mechanisms for citizens.

“When you grant facilities, it is often not clear who actually benefits from them. We propose to collect and return the money directly to the people, so that they can clearly see the support they receive,” he said.

In the context, the speaker noted that one of the options was the provision of monetized compensations, including for families with children.

“The proposal is for people to receive this money directly. For example, a compensation of 500 lei for each child, so that the benefit is visible and felt every month,” Grosu said.

According to him, compensation mechanisms could also be applied to the payment of energy invoices and other household expenses, depending on the level of consumption and the real needs of beneficiaries.

The parliament speaker assured that all proposals would be discussed with social partners and the business environment before a final decision is adopted.

“Our interest is for the system to be as clear as possible, as applicable as possible, and to produce the effects we all want,” Igor Grosu underlined.

At the same time, the official expressed confidence that the new measures, together with the changes prepared in the field of wages, would help maintain the population’s purchasing power and support more social categories.