​LAW PROVIDES NO VAT COMPENSATIONS TO FARMERS DUE TO EMBARGO

(Exclusive interview of Main State Tax Inspectorate Head Iurie Lichii to Infotag correspondent Vladimir Sidorenco)

Infotag: In connection with ban on fruit and vegetables imports to Russia, Moldovan agricultural producers are forced to sell their products to processing plants at a price lower than the initial cost. However, the Tax Code provides that in case goods are sold at a price lower than costs for their production, the delivery of goods is subjected to Value-Added Tax (VAT). Does this provision concern the agricultural producers as well?

Iurie Lichii : No, it does not. The Tax Code provides that the given provision does not include deliveries of agricultural products.

I.: In spring, farmers, purchasing the energy carriers, chemicals and other goods and services, were paying 20% VAT. Selling products at price lower than prime cost, in conditions of embargo, will lead to growing of the paid VAT sums against the received sums. Will the agrarians be repaid the VAT debit balance from the state budget?

I.L.: No. The Tax Code does not provide compensations in such cases. Accumulation of the VAT size takes place even when producers supply their goods to the domestic market, due to difference in the VAT rates. The VAT size is formed in particular on the basis of purchases, taxed by 20% rate, while at sales the rate of 8% is used. It is impossible to liquidate the VAT size exceeding even by means of raising the volumes of agricultural products sold.

I.: In their calculations, the beneficiaries have taken into account the VAT, paid by agrarians during purchasing materials and services, which should be paid to the state budget. Moreover, they have already paid it as well. International practice shows that in the given situation, the VAT debit balance is covered from state sources. It does not allow only receiving the VAT to the state budget, at non-compensation of it to the economic entities that is unreasonable distraction of turnover funds from farmers. Why this does not happen in Moldova?

I.L.: The Moldovan state legislation provides compensation of the VAT only in particular cases, but not due to the existence of the VAT size excess, as it is provided in other countries’ legislations. The cited situation is not included in the list of situations, stipulated by the law on the taxpayer right to the VAT compensation.

I.: And if the ban on fruit and vegetables import to Russia had not been introduced, Moldovan agrarians would have been compensated the VAT from the state budget?

I.L.: In case the export of goods and, correspondingly, its taxation with VAT zero-rates takes place, the taxpayer gets right to beneficiate from the VAT compensation according to the norms of the Tax Code. With all this, the Tax code does not include restrictions of the given right neither on types of goods nor on the countries of export.