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Foreign Trade Zones/Free Ports

Moldova's first Free Enterprise Zone (FEZ), "Expo-Business-Chisinau," was established in Chisinau in 1996, with a 30-year charter. The law on FEZ "Expo-Business-Chisinau" was adopted in late 1995. FEZ was designed to attract foreign investment and technology. This legislation provided many incentives, guarantees, and privileges for both foreign and local businesses in the fez. FEZ resident-producers were also exempted from customs duties and the twenty-percent value-added tax. Producers paid reduced income tax. FEZ enterprises that invested USD 250,000 or more in the zone were exempted from paying the profit tax for a period of five years. According to the law on the FEZ "Expo-Business-Chisinau" (Art. 7), if a new law were passed which changed FEZ enterprises' customs or tax privileges, the enterprises were granted "grandfathering" to the old legislation for a 10 year period from the moment of enactment of the new law. However, in 1998 due to political pressure, many of the initial incentives were withdrawn and many businesses (mostly wholesale-trade and retail) were closed. One of the FEZ' resident, Moldovan-American companies Link-Trading, accused Moldova's Customs Control Department of unduly forcing the company to pay customs duties and VAT on commodities it had imported and sold in Moldova. Link-Trading brought the case to the arbitrage court operated by the Stockholm Chamber of Trade. If the company wins the case, many similar suits will follow.

Four more free enterprise zones are under development in Moldova: "Tvardita" (central part of Moldova - Tighina), "Taraclia" (South), "Valcanes" (South - on the border with Ukraine), and "Otaci-Business" (North - on the border with Ukraine). The law on FEZ "Tvardita" was adopted in 1995 but was changed in 1998. Laws on the other three FEZ' were adopted later, in 1998, and have not changed. FEZ resident-producers are exempted from customs duties and the twenty-percent value-added tax. Producers from "Taraclia", "Valcanes", and "Otaci-Business" FEZ pay reduced income tax depending on a portion of their export sales. Residents of these FEZ' which invested USD 250,000 or more in their production facilities or in the zone are exempted from paying income tax for a period of three years; with investments of USD 500,000 or more and over USD 1 million are exempt from income tax for a period of 5 years and 10 years respectively.







  Copyright By :  Kish Trade Promotion Center  2002