Tax Amnesty and Zero-Rate Corporate Income in Moldova: Assessing the Potential Impact and Risks

This paper examines the potential impact of the capital liberalization, the tax amnesty and the zero-rate corporate income tax on the Moldovan economy. The initiative of these reforms was launched in April 2007 by the Moldovan President. As the reforms have been already launched, among the most important policy recommendations the authors have included those which may increase the positive effects expected by Moldovan authorities from the reforms. It is clear that besides experimenting the fiscal regime, Moldovan Government has to pursue wider and deeper policy objectives such as efficient judiciary, eradication of corruption, enforcement of fair competition among economic entities and streamlined regulatory environment. The public communication campaign should be intensified in order to convince the public about the Governmental commitment for a more serious enforcement of the Fiscal Code and its commitment not to engender criminal prosecution against owners of the legalized capital. Continuation of the privatization and restructuring of the public sector is necessary in order to avoid accumulation of new fiscal debts in the future.