I would point out that a significant portion of the reinvested profits go to the government _anyway_ as either VAT or salary taxes. So, it was just an additional tax on top of the 20-30% minimum taxes that the government receives as part of any investment. (Obviously, simplified numbers, I'm not an accountant or economist.)
The government will receive 8% of the reinvested 500k lei, as VAT as an absolute minimum, but likely it will be quite a bit more anywhere from 20-30%.
If you take that money and reinvest in just equipment or people, the government will receive VAT or salary taxes. BUT, if you are building something, the government will get 20% VAT on the brick, plus 30% to lay the brick, so depending on how exactly the costs line up, it could be up to 40% taxes on investments not including other costs for approvals, banking, accounting, stamps, etc. (Theoretically, nowadays, more VAT is refundable but even still, for large capital investments with low-sales, it functions as a no-interest multi-year loan to the government in a currency with high inflation.)
Taxes in Moldova expects that there is a grey economy, so there are a lot of taxes on top of taxes. A flat corporate tax on reinvested profit only makes sense when those corporations are were not paying salary taxes or are using schemes to avoid paying VAT.
As the economy becomes more white, then these duplicate taxes need to be consistently reduced across the board or with particular taxes, like reinvested profit, to be removed. Too much of a share of investment (especially small foreign investments) ends up in the bank's and government's hands before it even can be used by a business.
Hi Sergiu, I can let Mr. Alaiba stand up for his own article, but as a small business owner, small business representative and someone who did all the things you accuse him of not doing - I have one question: What is your argument?
You don't like the author - fine. You didn't criticize the argument, you didn't criticize the policy or the approach to taxation. You didn't actually write anything of substance at all - other than expressing a dislike of the author (again, fine).
I mention it because I invited people to write for this series because there is a failure across all political parties to have a real economic debate. What we get is people like Mr. Chicu saying that "the current authorities are amateurs, Moldova needs professionals, like me!" We hear this from all opposition parties.
I expect to publish more articles in this series from people who are not universally beloved. In those cases, as with this one, I expect readers to engage with the ideas and not to resort to ad-hominem attacks.
So I ask you - as an apparent professional, what would you suggest is a good path towards growing the economy?
(P.S> if your answer is to attack any other person I'll block you. Answer with a real policy and set of ideas in a constructive way - or just don't. I don't expect to agree, but I don't tolerate cheap and poorly constructed attacks)
I would point out that a significant portion of the reinvested profits go to the government _anyway_ as either VAT or salary taxes. So, it was just an additional tax on top of the 20-30% minimum taxes that the government receives as part of any investment. (Obviously, simplified numbers, I'm not an accountant or economist.)
The government will receive 8% of the reinvested 500k lei, as VAT as an absolute minimum, but likely it will be quite a bit more anywhere from 20-30%.
If you take that money and reinvest in just equipment or people, the government will receive VAT or salary taxes. BUT, if you are building something, the government will get 20% VAT on the brick, plus 30% to lay the brick, so depending on how exactly the costs line up, it could be up to 40% taxes on investments not including other costs for approvals, banking, accounting, stamps, etc. (Theoretically, nowadays, more VAT is refundable but even still, for large capital investments with low-sales, it functions as a no-interest multi-year loan to the government in a currency with high inflation.)
Taxes in Moldova expects that there is a grey economy, so there are a lot of taxes on top of taxes. A flat corporate tax on reinvested profit only makes sense when those corporations are were not paying salary taxes or are using schemes to avoid paying VAT.
As the economy becomes more white, then these duplicate taxes need to be consistently reduced across the board or with particular taxes, like reinvested profit, to be removed. Too much of a share of investment (especially small foreign investments) ends up in the bank's and government's hands before it even can be used by a business.
Hi Sergiu, I can let Mr. Alaiba stand up for his own article, but as a small business owner, small business representative and someone who did all the things you accuse him of not doing - I have one question: What is your argument?
You don't like the author - fine. You didn't criticize the argument, you didn't criticize the policy or the approach to taxation. You didn't actually write anything of substance at all - other than expressing a dislike of the author (again, fine).
I mention it because I invited people to write for this series because there is a failure across all political parties to have a real economic debate. What we get is people like Mr. Chicu saying that "the current authorities are amateurs, Moldova needs professionals, like me!" We hear this from all opposition parties.
I expect to publish more articles in this series from people who are not universally beloved. In those cases, as with this one, I expect readers to engage with the ideas and not to resort to ad-hominem attacks.
So I ask you - as an apparent professional, what would you suggest is a good path towards growing the economy?
(P.S> if your answer is to attack any other person I'll block you. Answer with a real policy and set of ideas in a constructive way - or just don't. I don't expect to agree, but I don't tolerate cheap and poorly constructed attacks)