Doing Business in Moldova

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1 Doing Business in Moldova

2 Preface This guide is one a series of guides designed to provide an overview of the key issues facing those considering doing business outside their home territory. Whilst every effort has been made to ensure accuracy, information contained in this guide may not be comprehensive and recipients should not act upon it without seeking professional advice. Facts and figures as presented are correct at the time of writing. Baker Tilly International is one of the world s leading networks of independently owned and managed accountancy and business advisory firms, and is represented by 33,600 people in 147 territories worldwide. Its members provide high-quality accounting, assurance, tax and specialist business advice to mid-market corporates, privately held businesses, governments, NGOs and not-for-profits. February 2018

Contents 1 Fact Sheet 2 2 Business Entities and Accounting 4 2.1 Companies 4 2.2 Partnerships 5 2.3 Branches and Representative Offices 5 2.4 Individual Enterprise 6 2.

3 Contents 1 Fact Sheet 2 2 Business Entities and Accounting Companies Partnerships Branches and Representative Offices Individual Enterprise Audit and Accounting Requirements Filing Requirements 7 3 Finance and Investment Exchange Control Banking and Sources of Finance Investment Incentives and Restrictions 9 4 Employment Regulations General Employment Matters Visas Trade Unions 11 5 Taxation 12

4 2 1 Fact Sheet Facts and figures as presented are correct as at 18 February Geography Location: Area: Land boundaries: Coastline: Climate: Terrain: Time zone: Eastern Europe 33,851km² Romania and Ukraine None Warm summers and moderate winters Rolling steppe with a gradual slope south to the Black Sea GMT +2 (GMT +3 during daylight saving time) People Population: 3.55 million (January 2017) Religion: Orthodox 90.1%, other Christian 2.6%, other 0.1%, agnostic <.1%, atheist 0.2%, unspecified 6.9% (2014 estimates) Language: Romanian is the official language (virtually identical to Moldovan) Government Country name: Government type: Capital: Administrative divisions: Republic of Moldova Parliamentary republic Chisinau 32 raions, three municipalities, one autonomous territorial unit, and one territorial unit Political situation The unicameral Parliament (Parlamentul) has 101 seats. The Head of State is the President, who is directly elected for a four-year term. The Head of Government is the Prime Minister, who is designated by the President upon consultation with Parliament. The Cabinet is proposed by the Prime Minister, nominated by the President, and approved by Parliament.

5 Doing Business in Moldova 3 Economy GDP per capita: US$1,900 (2016) GDP real growth rate: 4.1% (2016) Labour force: 1.31 million (Q3 2017) Unemployment: 3.4% (Q3 2017) Currency (code): Moldovan leu (MDL)

6 4 2 Business Entities and Accounting The main company forms in Moldova are the limited liability company and the joint stock company. Other business forms include partnerships, branches and individual enterprises. 2.1 Companies Limited liability companies A limited liability company may be formed by one or more individuals and/ or legal entities. The maximum number of members is 50. The capital of the company is determined by the company s founding document and is divided into shares. The liability of members is generally limited to the amount of their capital contribution. Limited liability companies are administered by the general meeting of the members. If there is a sole member, the rights and obligations of the general meeting are exercised by the sole member. A limited liability company is managed and represented by one or more directors. The articles of incorporation may also provide for the establishment of a company s board comprised of at least three members. One or more auditors may also be appointed. The appointment of an auditor is compulsory if there are more than 15 members Joint stock companies A joint stock company may be formed by one or more individuals and/or legal entities. The minimum share capital requirement is generally MDL20,000, which is divided into shares. The liability of shareholders is generally limited to the value of their shares. A joint stock company is required to publicly disclose information in accordance with legislation if it meets at least one of the following criteria: Registered capital of at least MDL500,000 and 50 or more shareholders Securities are listed on the stock market The company is a commercial bank, insurance company, investment fund, state pension fund, is in the process of privatisation or has placed public securities, or The company qualifies as a public interest entity.

7 Doing Business in Moldova 5 Joint stock companies are administered by the general meeting of the shareholders. If there is a sole shareholder, the rights and obligations of the general meeting are exercised by the sole shareholder. The company is managed by a company s board with at least three members (at least five members if there are 50 or more shareholders). The powers of the company s board may be exercised by the general meeting of the shareholders if there are less than 50 shareholders. An executive body must also be appointed, which may be comprised of a board or a sole person. Joint stock companies are also required to appoint an auditing committee with an odd number of members. Joint stock companies that are required to publicly disclose information (see above) are subject to external audits Company names and registration The company name must include its organisational form or relevant abbreviation. Companies are required to be registered in the State Register of Legal Entities and become separate legal entities from the date of registration. 2.2 Partnerships General partnerships A general partnership may be formed by a minimum of two and a maximum of 20 individuals and/or legal entities. The partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership Limited partnerships A limited partnership is comprised of general partners and limited partners. General partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership. The liability of limited partners is generally limited to the amount of their contribution. Limited partners may not take part in the administration of the partnership. 2.3 Branches and Representative Offices Foreign companies may generally establish a branch or representative office in Moldova.

8 6 2.4 Individual Enterprise An individual may undertake business activities as an individual enterprise. The owner is liable for the debts and obligations of the business with all of their assets. An individual enterprise is required to be registered in the State Register of Legal Entities. 2.5 Audit and Accounting Requirements Entities, which are businesses and individuals engaged in entrepreneurial activities, and certain other persons and entities, are required to keep accounting records and prepare financial statements. Public interest entities are required to prepare annual and semi-annual financial statements. Other entities are required to prepare annual financial statements, including complete and condensed financial statements. Complete financial statements include the balance sheet, statement of profit and loss, statement of changes in equity, cash flow statement, and notes to the financial statements. Condensed financial statements include the balance sheet, statement of profit and loss, and the explanatory note. Entities are also required to prepare an annual management report and an auditor s report (if an audit is required). Parent companies are generally required to additionally prepare consolidated financial statements, a consolidated management report, and the auditor s report on the consolidated statements (if applicable). Public interest entities (as defined) are required to prepare their financial statements in accordance with the International Financial Reporting Standards (IFRS). Other entities may use IFRS or Moldovan National Accounting Standards. Accounts are required to be kept in the Moldovan language and currency.

9 Doing Business in Moldova Filing Requirements Public interest entities are required to submit their annual financial statements (including consolidated statements where applicable) to the relevant authority within 120 days following the end of the financial year. Other entities are required to submit their annual financial statements (including consolidated statements where applicable) to the relevant authority within 90 days following the end of the financial year.

10 8 3 Finance and Investment 3.1 Exchange Control There are generally no foreign exchange controls. However, certain transactions need to be reported to the National Bank of Moldova or require prior approval. Anti-money laundering and anti-terrorist financing legislation requires reporting entities, including financial institutions, non-bank foreign exchange offices, casinos, real estate agents, auditors, precious metal/stone dealers, and lawyers, notaries and accountants in respect of certain transactions, to undertake customer due diligence and to report suspicious transactions to the National Anticorruption Centre (Centrul Naţional Anticorupţie (CNA)). 3.2 Banking and Sources of Finance The National Bank of Moldova (Banca Naţionala a Moldovei (BNM)) is responsible for (amongst others) price stability, monetary and foreign exchange policies, issuing national currency, and the supervision and regulation of financial institutions. Commercial banks operating in Moldova provide the majority of financial services. There are generally no restrictions on foreigners opening bank accounts in Moldova (certain documentation and a minimum deposit may be required), or on accounts containing foreign currency. The Moldova Stock Exchange (Bursa de Valori a Moldovei (BVM)) provides a marketplace for listing and exchanging securities. Private equity and venture capital investors provide investment in Moldova.

11 Doing Business in Moldova Investment Incentives and Restrictions There are generally no restrictions on foreign business investment in Moldova.

12 10 4 Employment Regulations 4.1 General Employment Matters National employment standards Legislation provides minimum rights and conditions of employment in Moldova, including maximum daily and weekly working hours, rest periods, paid annual leave entitlement, paid sick leave entitlement, and maternity leave rights. A contract of employment may be indefinite or for a fixed term not exceeding five years. The contract must generally be concluded in writing and include: Name and surname of the employee Identification of the employer Duration of the contract Date on which the contract has effect Speciality, profession or qualification of the position Duties to be carried out and specific risks Name of the work to be performed (as applicable for fixed term contracts) Rights and obligations of the employee and the employer Remuneration, including salary and bonuses, and payment frequency Compensation and allowances, including for working in difficult, harmful and/ or dangerous conditions Working hours and rest periods, including the working week of the employee Probationary period (if applicable) Annual leave and conditions for granting it, and Social and health insurance conditions. A contract of employment may be terminated in writing by either party or by agreement between the parties, or due to circumstances beyond the control of the parties. Circumstances beyond the control of the parties include the death of the employee or individual employer, the end of a seasonal contract, fixed term contract or contract for a particular task, where the employee has reached retirement age, or force majeure.

13 Doing Business in Moldova 11 An employee may terminate a contract of employment by providing the relevant notice period. An employer may terminate a contract of employment by providing the relevant notice period in certain circumstances, including unsatisfactory performance during the probationary period, liquidation of the employer, or violations of work obligations by the employee Pensions and other benefits Social security contributions generally provide associated benefits. 4.2 Visas Citizens of certain countries (including EU member states, Schengen area countries and the United States) do not generally require a visa for short term visits to Moldova. Visas available for entry into Moldova include: Visa A airport transit visa Visa B transit visa Visa C short stay visa, and Visa D long stay visa. For further information on Moldovan visa requirements, visit Foreigners may generally own real property in Moldova; however, agricultural land and forests may be leased, but not owned, by foreigners. 4.3 Trade Unions Trade unions may negotiate and conclude collective labour agreements with employers.

12 5 Taxation We have comprehensive tax guides covering 150 countries. To be sent these guides, please confirm which countries are of interest by email to tax.

14 12 5 Taxation We have comprehensive tax guides covering 150 countries. To be sent these guides, please confirm which countries are of interest by to tax.desk@bakertillyinternational.com Alternatively, download The Baker Tilly Tax Mapp, our mobile tax application, to access the guides and keep up-to-date with the latest tax news: Tax Mapp: Android Tax Mapp: IOS

15 Member Firm Contact Details Baker Tilly 65 Stefan cel Mare şi Sfânt Boulevard 5th Floor, Office 507 Chisinau MD-2001 Moldova T: F: Baker Tilly is the trading name of Baker Tilly Klitou and Partners SRL

16 Global Office New Bridge Street House New Bridge Street London EC4V 6BJ United Kingdom T: +44 (0) F: +44 (0) Baker Tilly International Limited, all rights reserved Arrandco Investments Limited is the registered owner of the UK trade mark for Baker Tilly and its associated logo. Baker Tilly International is a worldwide network of independent accounting and business advisory firms united by a commitment to provide exceptional client service. Baker Tilly International provides no professional services to clients but acts as a member services organisation. Baker Tilly International Limited is a company limited by guarantee and is registered in England and Wales.

Doing Business in Moldova

Doing Business in Moldova www.bakertillyinternational.com Preface This guide has been prepared by Baker Tilly, an independent member of Baker Tilly International. It is designed to provide information