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Foreign
Trade Zones/Free Ports
Moldova's first Free Enterprise Zone (FEZ),
"Expo-Business-Chisinau," was established in Chisinau in 1996, with
a 30-year charter. The law on FEZ "Expo-Business-Chisinau" was
adopted in late 1995. FEZ was designed to attract foreign investment
and technology. This legislation provided many incentives,
guarantees, and privileges for both foreign and local businesses in
the fez. FEZ resident-producers were also exempted from customs
duties and the twenty-percent value-added tax. Producers paid
reduced income tax. FEZ enterprises that invested USD 250,000 or
more in the zone were exempted from paying the profit tax for a
period of five years. According to the law on the FEZ
"Expo-Business-Chisinau" (Art. 7), if a new law were passed which
changed FEZ enterprises' customs or tax privileges, the enterprises
were granted "grandfathering" to the old legislation for a 10 year
period from the moment of enactment of the new law. However, in 1998
due to political pressure, many of the initial incentives were
withdrawn and many businesses (mostly wholesale-trade and retail)
were closed. One of the FEZ' resident, Moldovan-American companies
Link-Trading, accused Moldova's Customs Control Department of unduly
forcing the company to pay customs duties and VAT on commodities it
had imported and sold in Moldova. Link-Trading brought the case to
the arbitrage court operated by the Stockholm Chamber of Trade. If
the company wins the case, many similar suits will follow.
Four more free enterprise zones are under development in Moldova:
"Tvardita" (central part of Moldova - Tighina), "Taraclia" (South),
"Valcanes" (South - on the border with Ukraine), and
"Otaci-Business" (North - on the border with Ukraine). The law on
FEZ "Tvardita" was adopted in 1995 but was changed in 1998. Laws on
the other three FEZ' were adopted later, in 1998, and have not
changed. FEZ resident-producers are exempted from customs duties and
the twenty-percent value-added tax. Producers from "Taraclia",
"Valcanes", and "Otaci-Business" FEZ pay reduced income tax
depending on a portion of their export sales. Residents of these
FEZ' which invested USD 250,000 or more in their production
facilities or in the zone are exempted from paying income tax for a
period of three years; with investments of USD 500,000 or more and
over USD 1 million are exempt from income tax for a period of 5
years and 10 years respectively.
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