news agency Infotag

MOF HOPES FARMERS WOULD ADMIT THAT VAT WAS RIGHT DECISION – DEPUTY MINISTER

The Ministry of Finance hopes that in 2-3 years farmers will acknowledge that the decision to increase the Value Added Tax from the current 8% to 20% was fair, Deputy Minister of Finance Victor Barbaneagra said in an interview with “Banking and Finance & Profit” Magazine.

He said that the Ministry of Finance believes that the tax policy adopted for 2013, should lay at the basis of a new development stage.

“In 2010, when the 8% VAT in agriculture was introduced, the farmers expressed their indignation. Now, they admit that it was a well thought-out step. We are moving towards a new development stage and in 2-3 years they will understand that the ministry took the right decision,” said Barbaneagra.

He gave assurances that the 12% tax difference would be returned to farmers within a 30-day term, as provided for in the legislation.

“The decision to increase the VAT rates for agricultural producers was dictated by our common-sense. We should unify the taxation system in order to enhance the tax management mechanism. We are convinced that the standard VAT rates should not exceed 20% on the entire economic chain, from farmers to consumers. In order to defend the interests of agricultural producers, the 12% VAT difference will be repaid by the Ministry of Finance,” the deputy minister said, adding that the State will have to pay fines if it fails to meet its obligations towards farmers, within the established timeframes.

He also said that any tax exemptions may distort the tax system and hinder the tax management process. Moreover, they may create appropriate conditions for tax evasions.

“I would like to bring one example. Do the agricultural enterprises provide market surveillance or consulting services?” There are economic agents that take advantage of these tax exemptions, using them for their own interests and thus, inflicting losses to the state budget. Unfortunately, this phenomenon is gaining scope, when the shadowy companies are using the farmers’ facilities for their own convenience. Thus, both farmers and the State are incurring significant losses,” he said.

He said that the Ministry of Finance, as well as some international bodies – that are Moldova’s development partners, are consulting the central authorities on these issues and are discussing the achievements of the international practices in this field.

“By taking into account these recommendations, we are aim at forestalling these phenomena, in order to head off a similar situation as in Greece, for instance. Unfortunately, few people understand that the measures undertaken by the Ministry of Finance in the tax policy are positive. These actions are mid-term and long-term strategies meant to prevent any negative phenomena,” he said, adding that “the Ministry of Finance is a development partner, whereas the decisions are taken by the Moldovan Government and Parliament.”