The Good, the Bad and the Ugly of Moldova’s Tax Reform
There is a lot to admire in the Finance Ministry’s vision. There is also plenty to worry about.
Yesterday I sent you a deep dive into the Ministry of Finance’s ambitious 2027 fiscal policy proposal.
Today I want to share my perspective on this reform. My biggest takeaway is that this reform contains some of the boldest tax ideas Moldova has proposed in years - but it is being pursued through a rushed process, at a difficult geopolitical moment, without the institutional support needed to get a reform of this scale right
Disclosure: I am a founder and a board member of the Moldova Small Enterprise Alliance (AIM). AIM submitted its own recommendations on this reform to the Ministry of Finance. This article reflects my personal views and should not be taken as representing AIM’s position.
Too much, too fast, too little process…
This reform has a REALLY fast implementation timeline. The documentation states that the new rates should be in effect on this timeline:
October 2026 - “food products, public catering, eCommerce”
January 2027 - “medicines, cars, accommodation”
April 2027 - “energy resources”
October is right around the corner and the Ministry of Finance must envision rapid movement on this legislation in order to meet that timeline. Right now this is just a proposal. It must finish public consultations, get approval by the government, passage by parliament in 2 readings, promulgation by the President and publication in the official gazette. After that, common sense dictates that time is left for vendors to update accounting software and for companies to adapt. With parliament scheduled to leave on Summer recess at the end of July that does not leave a lot of time.
To this end, the reform was announced on June 11 with a public comment period open until June 19 - that’s only 6 working days.
Veronica Sirețeanu, Deputy Director of the American Chamber of Commerce (AMCHAM) and former Minister of Finance (February - December 2023), stated that while the allotted time complied with the law, it does not conform with the scope of this reform. She stated:
“Such a project would have required a minimum of 20 working days. For such a complex document, which contains changes with a transversal impact on the economy, this interval does not allow for a deep analysis and the formulation of well-founded positions”
Specifically she and AMCHAM have called for consultations by thematic blocks and for quality dialogue over speed.
I fully agree with that and note that it’s normal for thematic working groups to go through large reforms step by step before opening a whole legislative proposal up to public consultations. This isn’t just about getting input from the private sector and civil society - it’s also a mechanism to coordinate with the other ministries. It is telling that Minister of Economy Osmochescu has been silent on the reform except to note that they have not yet calculated the inflation impact.
It is more notable that the Minister of Health concluded that the reform will “destroy the healthcare system” on June 22 - well after the end of the official comment period. If it took the Minister of Health more than 6 working days to figure that out, I think we all deserve more time to digest a reform of this size.
This is about stability and confidence… not just taxes
In their 2025 election platform PAS promised fiscal stability. Specifically that tax policy would be changed (at most) once every 2 years and that they would present a…
“predictable fiscal calendar for the next 4 years, consulted with the business environment, civil society and social partners”
In this legislation’s current form, restaurants and hotels will see their taxes on non-alcohol products more than double by October. Energy taxes increases are being pushed until April, but that is more about waiting until after the cold season than anything else. This plan envisions rapid, sweeping changes.
More importantly, the 4 year plan is lacking and we don’t even know the 2 year plan. The Ministry is explicit in calling this the “Fiscal Policy 2027” and in the same press release states that a whole new Fiscal Code is coming. This larger reform will be developed over 2026-2027 with the goal of implementing it in 2028.
While they don’t explicitly unpack what the relationship between this reform and the larger 2028 goals are, they are implied in the structure. This document talks a lot about eliminating special tax regimes but doesn’t actually do that at all. So presumably companies operating under a Patenta or the IT Parks law have some big changes coming - but what are they, and when?
Where is the Prime Minister?
In Moldova it is sadly not unusual for ministries within the same government to publicly clash. The reasons here are complex but at a core level different ministries will pursue their own interests and portfolios when there is no central instruction or guiding principle to direct and / or coordinate them.
Rarely do these conflicts spill into the public like this and I have never seen it on such a huge issue. Comprehensive tax reform, whether in 2027 or by 2028, is an issue that touches every citizen in the country and every aspect of governance. That begs the question - where is the PM?
In late February Prime Minister Munteanu made an offhand comment about raising VAT for restaurants that set off a firestorm and caused Finance Minister Gavrilita to walk it back - explaining that restaurants are not being targeted and that a much larger reform is underway. Tacitly the message appeared to be that the PM did not know what he was talking about.
Since then we’ve heard nothing from him on this issue. Since June 11 he has not made any public statements, social media posts or press releases. No statements in support of his Minister of Finance, no explanations to the public about why rewriting the entire tax code is important, nothing.
When Prime Minister Munteanu was brought in out of almost total obscurity from the business community there was some hope that he would bring a private sector management style to government. Specifically, that the infighting between ministries would stop and people would start pulling in one direction towards EU accession.
If this is a management style, it is inspired by Lord of the Flies. If it isn’t one, it is simply neglect.
Diving into the Substance
Alright, enough about process - let’s talk about substance. There is a lot to like in this bill and a lot that I really worry about. I’m going to break these into the good, the bad and the ugly.