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2007 Assessment

Moldova: Integrity Indicators Scorecard

Moldova: Integrity Scorecard Report > Sub-Category: Taxes and Customs
Indicators		Score
58	In law, is there a national tax collection agency?	100
59	Is the tax collection agency effective?	88
60	In practice, are tax laws enforced uniformly and without discrimination?	25
61	In law, is there a national customs and excise agency?	100
62	Is the customs and excise agency effective?	75
63	In practice, are customs and excise laws enforced uniformly and without discrimination?	25

Indicator and sub-Indicator Details

In law, is there a national tax collection agency?

58: In law, is there a national tax collection agency?

Score:

YES

Comments: According to the Fiscal Code, the administration of taxes is performed in Moldova by the State Fiscal Inspectorate, subordinated to the Ministry of Finance.

References: Law on the Budgetary System (No.381-XII of 29.11.1990) Law on the Basis of the Fiscal System (No.1198-XII of 17.11.1992 Law on the State Fiscal Service (No.876-XII of 22.01.1992)

Is the tax collection agency effective?

59a: In practice, the tax collection agency has a professional, full-time staff.

Score:

100

Comments: By law, the tax administration in Moldova is operated through the Principal Tax Inspectorate subordinated to the Ministry of Finance, the Tax Inspectorate of the Gagauz Yeri autonomy, and the Territorial Tax inspectorates of the Rayon administrations and municipalities of the country. Funding of the Tax Inspectorate's system is provided by the budgetary law.

References: Law on the State Fiscal Service (NO.876-XII of 22.01.1992) More information on the operational side of tax administration can be found on www.fisc.md

Peer Review Comments: Finance Minister Mihail Pop and Chief Tax Inspector Sergiu Puscuta are regarded as good professionals, both by government and by media.

Peer Review Comments: Yes, resource shortages and lack of training particularly affect ability to file taxes and turn to the authority for advice.

59b: In practice, the tax agency receives regular funding.

Score:

100

Comments: In practice, the agency is one of the most successful amongst other state agencies, first of all because of the fact that year after year the collection of taxes in Moldova is growing, second because it is highly influential, and third because it is perceived as a fairly professional, technical and well-managed agency. Some other sources tell that the Customs Office and the Tax Inspectorate are the most affected by corruption agnecies (www.timpul.md - Dec. 19, 2003, No.107 - Vama si inspectoratul fiscal sunt cele mai afectate de coruptie institutii).

References: www.fisc.md;

Lilia Carasciuc - TI Report, December 2003, April 2004 www.transparency.md

Peer Review Comments: Fiscal Inspectorate is considered to be another major tool for pressure and political fights; it is widely known that if a businessman refuses to support certain "social activities" of the Communists' Party, such as reconstructing monasteries and churches, they will be paid a visit by the Fiscal Inspectorate who will "find something" for sure.

In practice, are tax laws enforced uniformly and without discrimination?

60: In practice, are tax laws enforced uniformly and without discrimination?

Score:

100

Comments: In practice, the work of the Tax Inspectorate is often subject to deep suspicions. The tax burden is considered to be to high for the private community of business (TI-Moldova, this is why the rate of tax evasion is so important!), while many others say that the Tax Inspectorate often implements political indications instead of approaching the tax payers in a fairly neutral and objective manner (Ziarul de Garda).

References: www.garda.org.md www.investigatii.md www.transparency.md

Peer Review Comments: Parliament often grants tax facilities to companies that are close to government representatives and especially to state-owned enterprises. And this year, President Voronin proposed - and Parliament adopted - a controversial and bitterly-criticized initiative on legalization of capital, fiscal amnesty, and reformation of the taxation system. Many experts viewed it as a package of measures to rescue the large money-losing enterprises, usually owned by the state. There were no objections from the tax service.

In law, is there a national customs and excise agency?

61: In law, is there a national customs and excise agency?

Score:

YES

Comments: By law, a State Department for Customs is established to oversee, enforce and rule all the activities related to the custom affairs in Moldova. Art.7 of the Customs Code stipulates the functional obligations of the customs bodies, their statute, standards, limitations, as well as the legal regime of the border crossing for goods and services.

References: Customs Code (No.1320-XII of 09.03.1993)

Is the customs and excise agency effective?

62a: In practice, the customs and excise agency has a professional, full-time staff.

Score:

100

Comments: In practice, the State Department for Customs is one of the largest state agencies in Moldova, with most probably the largest institutional budget - over 190 million of lei (US$16.5 million)annually, which is by far the most rich state body. Nevertheless, it is to be emphasized that 70 percent of all the income of the state budget in Moldova are collected at the border - with customs offices having an important role there. The Customs Department has managed to create a professional, full-time and modern customs office, and since 2005 it has received targeted technical assistance from the EU to modernize its standards of conduct and procedures. It has, however, been often subject to harsh criticism from mass media and Transparency International for suspicions on corruption, with many cases being reported orally, as well as with full evidence that prove that corruption is still an important institutional disease for the customs officers.

References: Customs Code (1993);

TI-Moldova Study on corruption in the custom bodies (November 2003) www.transparency.md;

Web site of the Customs Department of Moldova www.customs.md

Peer Review Comments: I would question the professionalism of custom servants, as they are seen not only by the public, but also by experts as the most corrupted in whole public service.

62b: In practice, the customs and excise agency receives regular funding.

Score:

100

Comments: Customs offices are financed regularly and generously from the state budget.

References: Customs Code (1993) Annual Budget of RM (2006)

In practice, are customs and excise laws enforced uniformly and without discrimination?

63: In practice, are customs and excise laws enforced uniformly and without discrimination?

Score:

100

Comments: Modernization of the customs offices takes time and is quite a controversial process. Although the Customs Department made many steps to enhance its professional standards, cases of corruption, political influence and smuggling remain frequent. In addition to that, Customs regulations were enforced on Transnistria only recently (since March 2006), with the establishment of the EU Border Monitoring Mission located on the border between Moldova and Ukraine (www.bumad.md).

References: Study on Corruption and Fiscal Discipline in Moldova, 2003: www.transparency.md;

Study on Corruption in the Customs Offices in Moldova, 2003: www.transparency.md;

Corruption in the Customs Office Remains an Obstacle to Economic Growth: www.justice.md;

V.Prohnitchi, Economic and Institutional Context of Corruption, RA/1, IDSI Viitorul: www.viitorul.org/public/433/ro.PE/1.pdf

Peer Review Comments: In opinion polls, customs officials along with police officers are named among the most corrupted professionals in Moldova - according to Transparency International Moldova, Center of Investigative Journalism, Anti-Corruption Alliance of Moldova. The Parliament, on the other hand, sometimes passes laws that spare selected companies from customs duties or excises. One of the latest cases involves Mold Itera Energy SRL, which in April 2006 obtained an exemption from customs duties for the import of materials to build a power station in Burlaceni village (Law 77 from 6 April 2006).