COST OF DOING BUSINESS 2017 - World...

Survey COST OF DOING BUSINESS 2017

Chișinău, December 2017

Developed by: NGO Rural Economic Development Center PROMO-TERRA

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2 Contents

Cost of Doing Business

Competitiveness Enhancement Project (CEP II) AOCDER Promo-Terra

Contents

ABBREVIATIONS .......................................................................................................................................................................................... 7

EXECUTIVE SUMMARY ................................................................................................................................................................................. 8

PURPOSE OF THE STUDY ...........................................................................................................................................................................12

METHODOLOGY .........................................................................................................................................................................................13

1 GENERAL INDICATORS ........................................................................................................................................................................19

1.1 Regulatory environment – general considerations .................................................................................................... 19

1.2 General time indicator ............................................................................................................................................... 19

1.3 General perception of the changes in the business environment ............................................................................... 20

1.4 General assessment of various business aspects ........................................................................................................ 21

2 REGISTRATION PROCEDURE ...............................................................................................................................................................22

2.1 Regulatory framework ............................................................................................................................................... 22

2.2 Time to complete registration procedures ................................................................................................................. 23

2.3 Costs of registration procedures ................................................................................................................................ 24

2.4 Perception of procedures ........................................................................................................................................... 24

2.5 Summary of analysis ................................................................................................................................................. 25

3 CONSTRUCTION ...................................................................................................................................................................................27


3.2 Costs and time required to obtain construction permits ............................................................................................ 28



4 LICENSING ............................................................................................................................................................................................31


4.2 Number of licenses .................................................................................................................................................... 32

4.3 Costs to obtain a license ............................................................................................................................................ 32



5 NOTIFYING OF THE TRADE ACTIVITY .................................................................................................................................................35

5.1 General regulatory framework .................................................................................................................................. 35

5.2 Time required to submit a notification ...................................................................................................................... 35

5.3 Perception of the notification procedure ................................................................................................................... 35


6 TRADING ACROSS BORDERS ................................................................................................................................................................37


6.2 Import transactions .................................................................................................................................................... 38 6.2.1 Certification costs of imported goods ............................................................................................................... 38 6.2.2 Customs costs ................................................................................................................................................... 39 6.2.3 Perception of import procedures....................................................................................................................... 39

3 Contents



6.3 Export transactions .................................................................................................................................................... 40


7 CERTIFICATION OF GOODS ..................................................................................................................................................................42


7.2 Certification costs ...................................................................................................................................................... 42

7.3 Perception of certification procedures ....................................................................................................................... 43


8 SANITARY OPERATING AUTHORIZATIONS ..........................................................................................................................................45


8.2 Obtaining sanitary operating authorizations .............................................................................................................. 45

8.3 Perception of the process to obtain a sanitary operating authorization ..................................................................... 45


9 SANITARY CERTIFICATION OF GOODS .................................................................................................................................................47


9.2 Obtaining sanitary certificates ................................................................................................................................... 48

9.3 Perception of procedure to obtain a sanitary certificate ............................................................................................ 48


10 PHYTOSANITARY CERTIFICATION ......................................................................................................................................................50


10.2 Obtaining phytosanitary certificates .......................................................................................................................... 50

10.3 Perception of procedure to obtain a phytosanitary certificate ................................................................................... 51


11 INSPECTIONS .......................................................................................................................................................................................53


11.2 Number and duration of inspections .......................................................................................................................... 53

11.3 Expenses incurred folowing the inspections ............................................................................................................. 54

11.4 Perception of number of inspections and difficulties ................................................................................................ 55


12 TAXES ..................................................................................................................................................................................................59


12.2 Administration of taxes ............................................................................................................................................. 59

12.3 Main difficulties in paying taxes ............................................................................................................................... 60


13 PRICE REGULATION .............................................................................................................................................................................62


13.2 The extent of goverment's intervention in price setting............................................................................................. 62

13.3 Perception of price regulation ................................................................................................................................... 62


14 REGULATION OF LABOUR RELATIONS ................................................................................................................................................64


4 Contents



14.2 Availability of workforce .......................................................................................................................................... 64

15 EXECUTION OF CONTRACTS ................................................................................................................................................................66

16 PROMOTION OF PERSONAL INTERESTS OF PUBLIC EMPLOYEES ........................................................................................................67

17 EVALUATION OF THE JUDICIARY SYSTEM ...........................................................................................................................................68


17.2 Methods used to settle disputes ................................................................................................................................. 68

17.3 Assessing the efficiency of using courts.................................................................................................................... 69


CONCLUSIONS ............................................................................................................................................................................................70

5 Tables and Figures



List of Tables

Table 1. Distribution of companies participating in the study .......................................................................................... 15 Table 2. Amount of time to complete the primary registration procedure, by government institution, in the last three

years .............................................................................................................................................................................. 24 Table 3. Amount of time to amend the incorporation documents, by government body, in the last three years ......... 24 Table 4. Registration-related problems .............................................................................................................................. 25 Table 5. Duration and amount of time spent to register with the SRC in recent years .................................................. 26 Table 6. Time and costs required to obtain permissions to commence reconstruction works ....................................... 28 Table 7. Time and costs required to obtain permissions to place into service the reconstruction works ..................... 29 Table 8. Problems relating to obtaining permissions for reconstruction and repairs .................................................... 29 Table 9. Average amount of time to obtain permissions and final approval, days ......................................................... 30 Table 10. Average costs to obtain a license ......................................................................................................................... 33 Table 11. Licensing related problems ................................................................................................................................. 33 Table 12. Evolution of costs related to licensing activities ................................................................................................ 34 Table 13. Documents required at the time of notification ................................................................................................. 36 Table 14. Costs and time to complete import customs procedures .................................................................................. 39 Table 15. Most significant problems on import ................................................................................................................. 39 Table 16. Changes in import-export procedures and regulations .................................................................................... 41 Table 17. Problems faced in the certification process ........................................................................................................ 43 Table 18. Changes in the process of certification of goods ................................................................................................ 44 Table 19. Average expenses incurred by respondents to obtain a sanitary authorization ............................................. 45 Table 20. Problems faced in the process of obtaining sanitary authorizations ............................................................... 46 Table 21. Changes in the process of obtaining a sanitary authorizations ........................................................................ 46 Table 22. Average costs incurred by respondent companies to obtain a sanitary certificate ........................................ 48 Table 23. Problems faced in obtaining sanitary authorizations ........................................................................................ 49 Table 24. Changes in procedures for obtaining sanitary certificates ............................................................................... 49 Table 25. Average costs incurred by respondents to obtain a phytosanitary certificate ................................................ 51 Table 26. Problems faced during the process of obtaining phytosanitary certificates ................................................... 51 Table 27. Changes in the procedures to obtain phytosanitary certificates ...................................................................... 52 Table 28. Average number and duration of inspections .................................................................................................... 54 Table 29. Share of companies that incurred payments following the inspections in the last year ................................. 55 Table 30. Impartiality of public servants ............................................................................................................................ 56 Table 31. Purposes of the inspection visits .......................................................................................................................... 56 Table 32. How inspections have changed ............................................................................................................................ 57 Table 33. Changes in the share of inspected companies, % per total surveyed companies............................................ 57 Table 34. Frequency of inspections (calculated only for companies inspected by respective authority) ...................... 58 Table 35. Frequency of inspections (calculated for all companies contained in the sample) ......................................... 58 Table 36. The necessary number of accountants to ensure timely and correct payment of taxes ................................. 59 Table 37. Time spent to submit a statement, hours ........................................................................................................... 60 Table 38. Taxes that generate most difficulties .................................................................................................................. 60 Table 39. Problems encountered in the taxation system ................................................................................................... 61 Table 40. Comparing the tax administration system ......................................................................................................... 61 Table 41. Methods used by government to control prices ................................................................................................. 62 Table 42. Price regulation in the Republic of Moldova ..................................................................................................... 63 Table 43. Assessment of labour force availability .............................................................................................................. 65 Table 44. Assessment of main problems related to labour relations regulation .............................................................. 65 Table 45. Monitoring the execution of contracts in Moldova ........................................................................................... 66 Table 46. Promotion of personal interests of public servants ........................................................................................... 67 Table 47. Methods used to solve conflicts, % of companies that had to solve conflicts .................................................. 69 Table 48. Reasons for not going to court ............................................................................................................................ 69 Table 49. Efficiency of resolving disputes through courts ................................................................................................. 69 Table 50. Comparison of main indicators ........................................................................................................................... 73

6 Tables and Figures



List of Figures

Figure 1. Geographical distribution of companies ............................................................................................................ 16 Figure 2. Distribution by legal form of business ............................................................................................................... 16 Figure 3. Share of companies based on number of employees ......................................................................................... 17 Figure 4. Sample structure by type of activity .................................................................................................................. 17 Figure 5. Share of time spent to comply with regulation requirements ........................................................................... 20 Figure 6. Assessment of changes in the business environment ......................................................................................... 20 Figure 7. Difficulties encountered ....................................................................................................................................... 21 Figure 8. Share of enterprises that contacted the State Registration Chamber over the last three years .................... 23 Figure 9. Problems faced by economic agents in the registration process over the last three years ............................. 25 Figure 10. Perception of changes in procedures governing the use of spaces .................................................................. 29 Figure 11. Problems relating to obtaining permissions for construction and repairs .................................................... 30 Figure 12. Perception of changes in the licensing process, % ........................................................................................... 33 Figure 13. Problems related to licensing ............................................................................................................................. 34 Figure 14. How managers perceive the transition from authorizations to notifications ................................................ 35 Figure 15 Handling situations of lacking certificate of compliance .................................................................................. 38 Figure 16. Perception of changes in import procedures .................................................................................................... 39 Figure 17. Perception of difficulties related to import transactions ................................................................................. 40 Figure 18. Perception of changes in export procedures ..................................................................................................... 40 Figure 19 Share of companies that certify goods ............................................................................................................... 43 Figure 20. Changes in the certification process .................................................................................................................. 43 Figure 21. Exporters’ perception of difficulties related to the certification procedures ................................................ 44 Figure 22. Changes in the process of obtaining sanitary authorizations ......................................................................... 46 Figure 23. Problems encountered in the process of obtaining sanitary authorizations .................................................. 46 Figure 24. Changes in the process of obtaining sanitary certificates ............................................................................... 48 Figure 25. Problems encountered in obtaining sanitary certificates ................................................................................ 49 Figure 26. Changes in the process of obtaining phytosanitary certificates ...................................................................... 51 Figure 27. Problems faced in the process of obtaining phytosanitary certificates .......................................................... 52 Figure 28. Changes in the number of inspections .............................................................................................................. 55 Figure 29. Changes in the perception of state inspection procedures .............................................................................. 56 Figure 30. Taxes that generate most difficulties ................................................................................................................. 60 Figure 31. Changes in the tax system .................................................................................................................................. 61 Figure 32. Companies that had to settle disputes ............................................................................................................... 68

7 Abbreviations



Abbreviations

CIS Commonwealth of Independent States

CMEA Classifier of Moldova's Economy Activities

JSC Joint Stock Company

LLC Limited liability company

LPA Local Public Authorities

ME Municipal Enterprise

NAC National Anticorruption Center

NBM National Bank of Moldova

NHIC National Health Insurance Company

NSIH National Social Insurance House

SE State Enterprise

SRC State Registration Chamber

USD United States Dollar

VAT Value Added Tax

8 Executive summary



Executive summary

This study was organized with the support of the Ministry of Economy and the World Bank. The

Survey on Cost of state regulation of business activity is carried out annually since 2002.

Survey timeframe

The data collection period was from September to October 2017. The survey study covered the

registration, construction, trading across borders, purchasing of equipment - in the last three years, the

judiciary environment - in the last two years and for the remaining areas - the last year or the time of

questioning.

Method

Interviews were carried out by trained personnel, guided by a structured questionnaire approved by the

beneficiary. Interviewers travelled to respondent’s business office to conduct face to face interviews

with company managers.

Companies have been randomly selected from the total number of companies in Moldova, currently

functioning.

The data was analysed using the SPSS software. To ensure the representativeness of the obtained

results, the high dispersion series outliers were removed. In many cases the median was used to

distinguish the central tendency.

Indicators were calculated by overall country, region, type and size of company. The report contains

only relations bearing some sort of relevance. Average indicators with values displaying very large

dispersions due to the low number of respondents were not included in the report.

Sample

For the questioning were selected randomly 630 representative companies based on their legal form,

number of employees, type of activity and geographic location. The sample does not contain

agricultural and individual enterprises, banking institutions, or companies located on the left bank of

the Nistru River.

Around 72% of the surveyed companies are located in Chisinau. Most entities (94%) are limited

liability companies. Companies employing up to 10 people accounted for 85% of the total.

General time indicator

The general time indicator describes the managers' perception of the degree of government

interference in the company's activity. The 2017 indicator remained steady compared to 2016, at 8%.

Registration

In 2017, it took 4 days to register a company with the State Registration Chamber - the average

amount of time recorded in the last 3 years. The amount of time required to modify the incorporation

documents has slightly decreased.

Most businesses do not encounter difficulties in the registration process. The share of respondents who

use intermediary services to complete the registration procedures has diminished.

9 Executive summary



Construction

In 2017 the procedure for issuing urban planning certificates and construction permits by the one-stop

shop for the authorization of construction works has been finalized. The amount of time to obtain

construction permits has slightly decreased.

Over the past three years, almost 29% of respondents have moved into new premises. Of these, only

3,3% have built them, their number decreasing continuously over the last years.

Most of respondents that moved to new locations (77,3%) have not carried out any alterations to the

premises. About 24% of them were required to get permissions to use the premises.

Licensing

In 2017, the share of companies that had a license at the time of questioning (42%) has not changed

compared to 2016. The average number of licenses per company increased from 1,1 to 1,4 - a value

registered throughout 2013-2015.

The amount of time and cost to obtain a license have not changed significantly. The share of

respondents who paid unofficial payments has diminished.

Notification

More than half (54%) of Moldovan companies fall under the Law on domestic trade. Three quarters

(76%) of them have submitted notifications to local public authorities of their operating trade

activities.

The amount of time to prepare and submit a notification was 6,0 days. Managers have spent around 4,6

hours on this procedure.

More than half of respondents do not think that carrying out a trade activity has become easier with the

elimination of the need to obtain an authorization. This opinion is influenced by the LPA's request that

the notification be accompanied by documents that were necessary to issue an authorization.

Import

About 34% of importers were required to obtain compliance certificates conforming to Moldovan

standards for their imported goods. Of these, more than three quarters had certificates of compliance

with the requirements of the country of origin. In a quarter of cases the goods were retained at

customs.

The certification of imported goods took 5,7 days. The cost of obtaining a certificate has decreased

from USD 202 to 137. About 16% of respondents paid bribes to obtain certificates.

About 40% of importers were required to obtain sanitary authorizations for imported goods.

The average amount of time to complete a customs procedure increased from 2,7 days in 2016 to 3,1

days in 2017. Related costs increased to USD 307.

Export

The procedures for an export transaction took an average 2,1 days, slightly longer than last year. The

cost of procedures has decreased to USD 105.

Certification of goods and services

Only 9% of the companies contained in the sample certified their goods.

10 Executive summary



About 60% of companies certify batches of goods. This certificate is now obtained in significantly less

time - from 7,6 days in 2016 to 3,0 days in 2017. Costs related to certification of batches of goods

amount to USD 106, an year-on-year increase by USD 60.

About 4% of companies certify mass-manufactured goods. The amount of time required to obtain this

certficate has not changed significantly and stands at 10 days. Related costs have increased to USD

122.

Sanitary operating permits

In 2017 the process of obtaining sanitary operating permits has not undergone major changes.

About 39% companies had to obtain sanitary operating permits. A sanitary permit is obtained in 6,7

days. The total cost is about USD 75.

Sanitary certification of goods

Only 8% of respondents had to obtain sanitary certificates. The process took 5 days on average and

cost about USD 60, without significant changes compared to the previous year. Most companies have

not pointed out any changes in the sanitary certification process.

Phytosanitary certification

Companies are less involved in phytosanitary certification compared to sanitary or compliance

certification. The 6% of respondents that applied for this certificate paid USD 34 and obtained it in 2

days. Compared with the previous year, both indicators have essentially not changed. It should be

noted that the sample does not include agricultural enterprises and farm households that are affected by

the respective regulatory area to a greater extent.

Inspections

In 2016, the share of verified companies has diminished, as a results of the moratorium on inspections

imposed by the Government. The waiver of moratorium at the moment has led to an increase in the

number of inspections to 2,9 visits per year. The total amount of time spent by inspectors with a

company has increased more than twice (11,5 hours/year).

Most government institutions now carry out inspections more frequently.

The share of companies that were fined has increased. Meanwhile, the share of companies that paid

bribes has diminished.

Only 9% of companies said that they are treated equally by the law. About 38% are convinced that the

law is applied selectively.

Taxes

The procedure for calculating, reporting and paying corporate income tax generates the most

difficulties.

Price regulation

No major changes were noted in this field over the past three years. The government interferes in

product price formation at 13% of companies. The sales volume at regulated prices slightly increased

to 3,9%, returning to the 2015 value.

11 Executive summary



Regulation of labour relations

Most of the companies have the necessary number of employees. One in four interviewed companies

think they have staff shortage. No specific problems have been identified in labour relations regulation.

Contract monitoring

Over the past thirteen years there have been no significant fluctuations in the contract execution

process. The state interfered in contract signing process of 4% of companies.

Judiciary system

Every fifth respondent had to settle disputes. Their share has not changed significantly over the last

four years. Most of the disputes were business conflicts with other companies.

The share of companies taking to courts to address the conflicts has diminished, returning to the level

of 2015 (46%). Almost a third of businesses used various unofficial but legal methods. Disputes were

solved by illegal methods in only 7% cases, with no major changes compared to the previous year.

Around half of the companies who filed a lawsuit were satisfied with the decision.

12 Purpose of the study



Purpose of the study

The study was developed to monitor the main indicators describing the business environment

regulation as well as to quantify the impact on economic agents of the actions undertaken by the

Government during the analyzed period.

The project was carried out with a focus on the following goals:

Provide the Government of the Republic of Moldova, as well as the national and international

institutions with quantitative data on the cost incurred by businesses to comply with

government regulations.

Assist the Moldovan Government in the qualitative policy analysis with a view to implement

the necessary decisions to improve business and investment climates in Moldova.

Assist the civil society institutions that make recommendations and need to monitor their

impact.

Establish a tool to monitor the changes in the business environment and the impact of the

measures taken to reduce barriers and corruption in business.

13 Methodology



Methodology

Outlines

The objective of the study can be achieved by measuring and comparing in time the perception of the

entrepreneurs and managers of the companies about the costs incurred by them in order to comply with

the requirements imposed by various government regulations.

The method is based on the assumption that the decision to start and develop a business is based more

on managers' perception on costs rather than on the actual expenses incurred by them. If managers feel

less pressure in a certain regulatory domain, it is deemed as a positive fact, even if no improvements

have been made in the respective domain in recent years. Similarly, cases where government bodies

have undertaken improvements in a certain area, but the changes were not made known to companies

or were insufficiently "visible" to be referred to by managers, were deemed as a neutral fact.

Managers' perceptions of virtually every analyzed segment are depicted concurrently with regulatory

costs, expressed in terms of time and money, pursuant to the regulations in effect in the Republic of

Moldova.

Areas analyzed

In order to ensure the comparability of the results, the questionnaire developed in this study follows

with small changes the logic of the questionnaires used in previous surveys.

In order to keep the questionnaire updated with the latest changes to the current legislation, the chapter

on trade authorizations was modified and the questions regarding the need to return VAT invoices

upon the replacement of the founder were excluded.

Other changes refer to removing the regulatory areas with impact on an insignificant number of

companies, such as the construction of new premises and the procurement of equipment, as well as

explaining certain questions that often required clarification on behalf of the interviewers.

Regulatory costs are analyzed on the following components, where applicable:

taxes/tariffs established by state institutions;

various legal payments to people outside the company or institutions, intended to facilitate the

process of compliance with state regulations (lawyers, experts in various fields, acquaintances

who have passed these procedures, etc.);

payments for notary services that are required to comply with state regulations;

transportation costs for travelling to the regulatory body or to collect the necessary documents

(round trip);

various "voluntary" contributions made under the pressure by state bodies to facilitate the

process of obtaining documents;

bribery and other unofficial payments to representatives of state bodies to facilitate regulatory

procedures;

time spent by company employees to obtain the necessary documents;

amount of time spent to obtain documents, from the time the procedure was initiated until the

required document was obtained.

14 Methodology



The overall perception is analyzed for each area of regulation to unveil the changes in the complexity

of procedures compared to the previous year (more difficult/bad, no changes, simpler/good). It also

analyzes, if necessary, on a scale of one to five, the impact of various impediments in the regulatory

area in question.

Selection of companies

To select businesses for interviewing a database was created comprising all companies functioning at

the time of questioning, excluding farming households, financial institutions and individual

enterprises. The database does not contain legal persons that do not carry out economic activities:

nongovernmental organizations, community associations, educational institutions, housing associations

and others. The selection of companies to be excluded was carried out based on CMEA codes. The

regulatory framework of these companies is specific and does not comply with the purpose of this

study.

For the survey, a sample of 600 companies was randomly generated from the database using the SPSS

programme. Each company had equal chances to be selected. The sample was tested in terms of

representativeness, using four criteria: region (raion), field of activity, legal & organizational form and

number of employees.

The sample structure was compared with the general population structure, from which it was extracted.

Cases where significant differences (of more than 1%) were seen between the share of general

collectivity and the sample, the "surplus" companies were removed from the general population. As a

result, another 20 companies were randomly selected from the "deficient" group of companies, using

the SPSS software. After verifying the structure of the sample with that of the collectivity, another 10

companies were selected using the above method.

In several instances, no representatives of the company could be found at the legal address. Using the

information found on the internet or the landline telephone numbers, interviewers travelled to the

premises where the actual activity was carried out. Businesses that could not be found at both

addresses were excluded from the sample. In some cases the persons entitled to offer information

could not be contacted after repeated attempts or they refused to be interviewed.

Companies that were removed from the sample were replaced by others, that were part of the same

group, according to the four criteria above.

Approximately 19% companies refused to be interviewed, other 35% could not be found at the

address. There has been noted an improvement of these indicators compared to the previous year and

the 7 p.p. decrease of the refusal rate indicates that companies are now more open in relation to

business regulatory issues.

Sample

The sample includes 630 businesses across the country except the raions located on the left bank of the

Nistru river. In order to make region-wise comparisons, the raions and Bălți Municipality were

grouped into three regions: north, centre and south.

15 Methodology



Table 1. Distribution of companies participating in the study

Region Companies Share

Chisinau 454 72%

North 64 10%

Centre 68 11%

South 44 7%

Legal form

Limited liability companies 589 93,5%

Joint stock companies 17 2,7%

State or public enterprises 4 0,6%

Other 20 3,2%

Number of employees

1 – 10 533 84,6%

11 – 50 73 11,6%

51 – 200 18 2,9%

> 200 6 1,0%

Field of activity

Food industry 16 2,5%

Other industries 54 8,6%

Trade 265 42,1%

Transport 43 6,8%

Constructions 35 5,6%

Services (excluding transport) 159 25,2%

Other companies (management consultancy,

scientific activity, legal advice, research, etc.)

58 9,2%

Most of the interviewed companies are located in Chisinau (72%). Around 10% are located in the

north, including the municipality of Bălți. Companies located in the centre accounted for 11% of the

total. The remaining entities are found in the south region (see Figure 1).

16 Methodology



Figure 1. Geographical distribution of companies

Similar to previous surveys, limited liability companies made up more than 90% of the total number of

the surveyed companies (see Figure 2)

Figure 2. Distribution by legal form of business

Most companies have up to 10 employees, their share has not changed compared to previous studies.

(see Figure 3).

Chișinău ; 72%

Centre; 11%

North; 10%

South; 7%

LLC; 94%

JSC; 3%

SE and ME; 1% Other; 3%

17 Methodology



Figure 3. Share of companies based on number of employees

More than 40% of the surveyed companies carry out trade activities. Companies in the service

industry, including transport, account for more than 30%. Compared with previous years, the

distribution has not changed significantly.

Figure 4. Sample structure by type of activity

Interviewing

The persons approved to conduct interviews were accepted only after completing special training.

Where possible, respondents were informed in advance about the interviewer's visit.

The interview was conducted with the first person in the company or his delegated representative. The

respondent was informed about the purpose of the survey. Respondents were interviewed in face-to-

face interviews, based on questionnaires structured by regulatory areas. In order to facilitate the

interviewing process and avoid ambiguities in the interpretation of the text, the questions were set up

in the form that would be read to the respondent. Also, the questionnaire contained references to

different questions depending on the answer.

In order to prevent a distorted assessment of managers’ perception, it was recommended, if possible,

1-10 employees; 85%

11-50 employees; 12%

51-200 employees; 3%

more than 200 employees; 1%

Trade; 42%

Other services; 25%

Transport; 7%

Construction; 6%

Industry - other; 9%

Food industry; 3%

18 Methodology



that they avoid consulting the accounting records. Interviewers were instructed to avoid suggesting

answers or objecting to the answers provided by managers.

Checking the quality of data collection

In order to ensure the quality of data collection, about 10% of interviewed companies were randomly

contacted. Following a short discussion on the phone, it was verified that:

1. the interviewer has indeed discussed with the company official

2. answers to several questions match those noted in the questionnaire.

Data processing

The statistical data obtained in the survey were analysed using the SPSS statistical program.

Before starting the calculation of indicators, the outliers in the database most likely to distort the

average values were removed. The threshold is decided upon by the expert that performs the analysis.

As a rule, the elimination of one data should not affect the average value of the series. In practice, the

degree depends on the number of answers and the size of dispersion. If the resulted dispersion is too

high, the indicator average is not representative and it is removed from the analysis results.

The average values are calculated both within the sample and divided into groups, depending on the:

region, company size, type of activity and organizational and legal form. The report contains only

results bearing some kind of correlation. Often times, the dispersion drawn by the amount of payments

is too high to allow the calculation and the analysis of the average amount. However, it might prove

useful to include the data on the share of companies who made such payments. E.g. it is important to

see how the share of companies that made unofficial payments has changed. For areas where the

number of respondents is insignificant, only synthetic indices were calculated per total country.

The average data was calculated only for respondents who answered the corresponding question. For

example, the average transportation expenses are calculated only for respondents who mentioned

having incurred such expenses. The average total expenses represents the average component

expenses, weighted by the number of respondents who have incurred such expenses.

The value of indicators included in the report are calculated in US dollars at a rate set by the National

Bank of Moldova during that period or, where applicable, at the time of questioning.

The following exchange rates set by the National Bank were used in the study:

2015 - 18,82

2016 - 19,92

January-October 2017 - 18,72

19 General Indicators




1.1 Regulatory environment – general considerations

The main laws that regulate the entrepreneurial activity are as follows:

Law no. 235 of 20 July 2006 on Fundamental principles governing entrepreneurial activity

(Guillotine II). Some of the principles to be mentioned:

The tacit approval to start and/or operate a business activity where the applicant is not

notified within the deadline set by law.

The advisory status of the state supervision of entrepreneurial activity, except for financial

and tax.

Nullity of payments for services rendered and documents issued to entrepreneurs by public

authorities if they are not approved by law.

Prerogative of the Parliament in establishing the compulsory technical and sanitary

conditions, standards and other similar documents.

Handling doubts of law enforcement in favour of the entrepreneur

Law no. 280-XVI of 14 December 2007 and Law no. 281-XVI of 14 December 2007, approved

for the purpose of adapting the regulatory framework to the principles laid down in Law no.

235-XVI.

Law no. 160 of 22 June 2011 on Regulation through authorization of entrepreneurial activity

and Law no. 162 of 22 July 2011 on Amendment and supplement of certain legislative acts that

establish the Nomenclature of permissive documents, as well as sanctions against persons in

key positions who delay the release of permissions or request additional documentation that is

not set out in the Nomenclature (Guillotine II+).

1.2 General time indicator

The general time indicator is a synthetic indicator broadly

describing the influence of state bodies over a company. It

represents the perception of the amount of time the company

management spends to communicate with representatives of the

state bodies. Throughout 2010-2015 the indicator has virtually

not changed, fluctuating between 10% and 11%. In 2017, the

indicator did not change compared to 2016 – standing at 8%.

The absolute value of the indicator is relevant to a limited extent.

However, it is important to observe how the indicator changes

over time, as shown in Figure 5.

Companies in Other Services (6,7%) and

Trade (7,3%) spend the least amount of

time to communicate with state bodies.

Companies in Non-food Industry spend

the longest period of time for this

purpose (10,7%).

Managers of companies with up to 10

employees, which account for 80% of

the sample, spend on average 7,6% of

the time on communicating with state

bodies, while companies with more than

10 employees feel more pressure from

state bodies (9,7%).

By regions, the best situation is

observed in the North (6,3% of the

time), while the South experiences the

opposite, with managers spending an

average 9,3% of their time on this

process.




Figure 5. Share of time spent to comply with regulation requirements

1.3 General perception of the

changes in the business

environment

In 2017 respondents' perception of

changes in the business environment

has improved. The share of companies

who noticed improvements has grown,

while the share of businesses who

stated that the situation has worsened

has decreased. It is worth mentioning,

however, that the share of the latter

continues to be higher.

This indicator measures the trust managers and entrepreneurs have in state institutions rather than the

implemented policies. It depicts the business environment’s perception of state’s image.

Figure 6. Assessment of changes in the business environment

17%

13%

16%

14%

11% 10% 10% 10% 11% 11%

10%

7,9% 7,9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

34%

30%

32%

42%

26%

33%

36%

33%

46%

30%

27%

23%

40%

47%

53%

53%

52%

42%

45%

49%

43%

55%

60%

57%

25%

24%

15%

5%

22%

25%

18%

18%

11%

15%

13%

20%

0% 20% 40% 60% 80% 100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

worse no changes better

By sector, companies in Construction (34%) and Transport (30%)

account for the largest number of companies that believe that doing

business in Moldova has become more difficult

In R&D, scientific, legal, notarial, consulting (26%) and Other services

(24,5%), the number of managers who saw improvements in the business

environemnt surpassed the number of managers who say the opposite

Companies in Chisinau saw more improvements in the business

environment (25,2%) compared to companies in the rest of the country

(7,4%).

At the same time, companies in both Chisinau (23%) and the rest of the

country (22,2%) noted a worsening of the business environment.




1.4 General assessment of various business aspects

The biggest problems faced by companies in managing and operating their business were related to

frequent changes in the legislation, tax system and protection against unfair competition.

The graph below shows how the regulatory areas have changed over the last four years in terms of

their impact on business environment.

Certification of goods is the least challenging procedure.

Figure 7. Difficulties encountered

2,7 2,6

2,8 2,6

3,1 2,8

2,2 2,3 2,2

2,7 2,5

3,1 2,9

2,6

0

0,5

1

1,5

2

2,5

3

3,5

Lice

nsi

ng

Re

gist

rati

on

Au

tho

riza

tio

ns

Co

nst

ruct

ion

Tax

syst

em

Insp

ect

ion

s

Pro

mo

tin

g p

ub

lic s

erva

nts

'in

tere

sts

Ce

rtif

icat

ion

of

goo

ds

Pu

blic

ser

van

ts r

equ

esti

ng

favo

urs

Law

ap

plie

d s

ele

ctiv

ely

Nee

d t

o m

ake

un

off

icia

lp

aym

ents

Fre

qu

en

t ch

ange

s in

legi

slat

ion

Un

fair

co

mp

eti

tio

n

Imp

ort

-exp

ort

op

erat

ion

s

2014 2015 2016 2017

22 Registration procedure




2.1 Regulatory framework

The State Registration Chamber has the authority to register new businesses and amend the

incorporation documents. These procedures are regulated by Law no. 220-XVI of 19 October 2007 on

State registration of legal entities and individual entrepreneurs" (effective 30 May 2008).

In order to officially register a business, the following documents are required:

a) application for registration, compliant with the sample approved by the state registration

body;

b) decision on incorporation and incorporation documents of the legal person, based on its legal

form, in two copies;

c) a document confirming the payment of the registration fee.

To register their business with the state, foreign-funded legal entities are required to submit additional

documents:

a) excerpt from the national register of investor's resident country;

b) incorporation documents of the foreign legal entity;

According to Law 21 of 04 March 2016, procedures related to state registration are carried out through

the one stop shop for state registration office. This is a "mechanism whereby the state registration

body delivers to parties engaged in entrepreneurial activities, through one access point, advice on legal

formalities regarding the incorporation and registration of a legal person and of an individual

entrepreneur; verifies the name of the legal entity, produces the incorporation documents, the state

registration, publishes the information in the electronic Newsletter; requests the necessary information

on registration from public authorities without involving the registrant; distributes the elements

contained in the Register of legal entities and the Register of individual entrepreneurs to relevant

authorities responsible for tax, statistical, health and social records."

The state registration is carried out within one office day.

Registration of legal entities and amendments to the incorporation documents cost MDL 1149. Other

services related to the state registration are rendered for the amount set by Law no. 220-XVI of 19

October 2007.

The State Registration Chamber is responsible for the legal person’s tax, statistical, health and social

registration (record) by submitting electronically the data on its registration to relevant authorities. The

Chamber also notifies the legal person of the registration process.

Law no. 90 of 29 May 2014 (published on 27 June 2014) simplified the procedures to suspend an

activity, to reorganize or close a company. The Law also reduced the waiting period from the moment

the notice has been published in the Official Gazette.

Government bodies may request information at no charge from the State Register only in electronic

form.

Law no. 104 of 9 June 2017, published on 7 July 2017, is to further simplify the procedures for

liquidation of companies by clarifying and simplifying respective procedures.




2.2 Time to complete registration procedures

About 14,8% of the interviewed companies contacted the

State Registration Chamber throughout the past 3 years. The

share remained unchanged compared to previous years.

Around one third of them have registered their business; two

thirds of them have made changes to the incorporation

documents.

Figure 8. Share of enterprises that contacted the State Registration Chamber over the last three years

One third of respondents registered or changed the incorporation documents through an intermediary.

The average registration time in this case was 8,0 days. Amendments to the incorporation documents

via intermediaries took 8,4 days to complete.

During the period under review, the registration of a new company with the State Registration

Chamber took 4,0 days. Managers spent 4,0 hours on the registration procedures.

The above figures cover the timeframe from the moment the documents are filed with the State

Registration Chamber up to moment the registration or the amendments are finalized. These figures do

not cover the cases where companies have turned to an intermediary.

The share of new businesses that had to "register" over the past three years with the Statistics and

Sociology Department, the State Tax Service, the National Health Insurance Company and the

National Social Insurance House is steadily decreasing.

Registration; 5,1%

Amendments; 9,7%

Did not contact; 85,2%

By sector, companies engaged in

Industry account for the largest share

(20%) of registrations/amendments to

the incorporations documents.

Companies in Transport account for the

lowest (9,3%) number of

registrations/amendments.

By regions, companies located in the

North have contacted most often the

State Registration Chamber (20,3%).

Only 7,4% companies located in the

Central region were involved in these

processes.




Table 2. Amount of time to complete the primary registration procedure, by government institution, in the last three years

Duration Time

Government body Reported, % days Reported, % hours

State Registration Chamber 90 4,0 81 4,0

Statistics and Sociology Department 38 1,0 24 1,0

State Tax Service 48 1,0 38 2,0

National Health Insurance Company 38 1,0 24 1,0

National Social Insurance House 38 1,0 24 1,0

The amount of time required to make changes to the registration documents was 3,2 days. The amount

of time spent on procedures was 2,7 hours.

Table 3. Amount of time to amend the incorporation documents, by government body, in the last three years

Duration Time

Government body Reported, % days Reported, % hours

State Registration Chamber 53 3,2 50 2,7

Department of Statistics and Sociology 25 1,5 23 2,0

State Tax Service 30 1,5 30 3,0

National Health Insurance Company 20 1,0 15 3,0

National Social Insurance House 20 1,0 15 3,0

Most of the time in the registration procedures was spent with the State Registration Chamber.

Registering entries with other institutions took 1-3 hours.

2.3 Costs of registration procedures

The cost for registration with the State Registration Chamber is around USD 73. An insignificant

number of respondents mentioned payments to other institutions.

The costs to register or make changes to incorporation documents through intermediaries were USD

191 and USD 150 respectively.

In order to ensure the representativeness of the data, the median was used to describe the average.

The number of respondents who made unofficial payments to facilitate the registration process is

insignificant.

2.4 Perception of procedures

Respondents who registered or amended the incorporation documents during the last three years were

asked to assess the problems they encountered by scoring from 1 to 5, where 1 - no issues and 5 -

major issues. The table below illustrates the assessment results of difficulties faced during the

registration of a company.




Table 4. Registration-related problems

Period of data collection

Problems 2014 2015 2016 2017

Difficult registration procedures 1,7 1,9 2,6 2,4

High costs of the procedure 1,8 2,0 2,3 2,2

Need to prove the physical address of the legal

entity

1,3 2,0 1,9 1,9

The need to make unofficial payments 1,2 1,7 2,1 1,9

The data represent the opinion of respondents that have registered or made changes to the

incorporation documents over three years: the survey period and two previous years.

The share of companies that had rated the procedures with the State Registration Chamber as being

complicated has slightly decreased (see Table 4 and Figure 9).

Figure 9. Problems faced by economic agents in the registration process over the last three years

2.5 Summary of analysis

In the last three years the average amount of time to register a company with the SRC was 4,0 days.

Amendments to the incoporation documents took during this period of time around 3,2 days to

complete. The data does not include registrations with other state institutions (see Table 5). Compared

to previous periods, the indicator has slightly improved.

About one third of respondents have resorted to using intermediaries to carry out registration

procedures. Both the time and costs were higher compared to registering in person. Their share has

decreased compared to last year.

Most companies do not encounter difficulties in the registration process.

-7%

-12%

-9%

-7%

-2%

-2%

-2%

30%

26%

23%

19%

23%

35%

49%

49%

-40% -20% 0% 20% 40% 60% 80% 100%

Difficult procedures

Cost of procedures

Proving the legal address

Unofficial payments

Significant problem Critical Insignificant Not difficult




Table 5. Duration and amount of time spent to register with the SRC in recent years

Survey period

Indicators

2015 2016 2017

Time to complete a registration, days 7,1 3,9 4,0

Time to complete amendments to the incorporation documents,

days

5,0 4,4 3,2

Time spent on registering, hours 4,8 4,2 4,0

Time spent on amending the incorporation documents, hours 3,9 5,1 2,7

The data represent the opinion of respondents that have registered or made changes to the

incorporation documents over three years: during the survey period and two previous years.

27 Construction



3 Construction


Law no. 721-XIII of 2 February 1996 on the Quality of Constructions establishes the legal, technical,

economic and organizational framework of activities in Construction carried out by natural and legal

persons, their obligations and responsibility regarding the quality in construction. The law sets out

regulations on new constructions, upgrading works, modifications, transformations, repairs and

strengthening works.

According to the amendments introduced by Law no.153 of 30 July 2015, a construction may

commence only after the project has been verified by project verifiers certified with relevant

authorized institutions.

According to Law no. 721-XIII 02 February 1996, two Government Decisions were approved on 25

June 1996: no. 360 on State Supervision of Quality in Constructions and Government Decision no. 361

on Construction Quality Assurance.

Decision no. 360 approves three regulations aimed at quality control in constructions:

The regulation establishes ways to exercise government supervision of quality in constructions;

Regulation on State Inspection in Construction;

Regulation on the supervision of the use of public investments in constructions.

Decision no. 361 approves the Regulation on verification of projects and carrying out of constructions.

It also approves the technical expertise of projects and constructions. The Regulation stipulates the

procedures for verification and technical expertise of the project as well as verification techniques of

the construction process.

The final approval is governed by Regulation on permission to use the construction and related

facilities, approved 23 May 1996 by Government Decision no. 285. Through the amendments brought

by Government Decision no. 318 of 23 May 2017, procedures for the approval of constructions

financed by private financial means have been substantially simplified.

The main responsibilities in placing the constructions into service following the final approval are

stipulated in the Regulation on monitoring the construction's performance, interventions over time and

post-use of construction, approved 24 April 1997 by Government Decision no. 382.

Law no. 835 on Urban and Spatial Planning Principles of 17 May 1996 and Law no. 163 of 09 July

2010 on the permission to build a construction define the principles for issuance of the urban planning

certificate and the building permit:

The urban planning certificate and the building permit are issued by local public administration

authorities.

The urban planning certificate is issued within a maximum of 20 office days. The building

permit is issued in 10 office days.

If the local public administration authority remains silent for the time prescribed by law, the

urban planning certificate and the building permit will be deemed granted. If the applicant does

not receive a written notification on the reasons for the registration rejection and/or for the

rejection of the application for building permit/urban planning certificate, the construction may

commence.

28 Construction



The Government Decision no.1469 published on 3 March 2017 approved the Regulation on the

creation and functioning of the one-stop shop for the issuance of construction permissions. The

Regulation sets out in detail the procedure for issuing the urban planning certificate and the building

permit.

The main provisions contained in the regulation on constructions are as follows:

The use of land plots and design drawings can be performed only after the urban planning

certificate has been obtained

Construction works are carried out exclusively according to a plan developed by an authorized

natural or legal person.

o Construction works can commence only after obtaining the building permit.

The quality of constructions of any use, regardless of their type of ownership and source of

funding, also construction works, reconstructions, upgradings and major repairs to existing

constructions, manufacture of construction materials and items are subject to government

inspections.

The State Inspection in Construction carries out separate quality of construction verifications in

all stages of the construction (planning, design, permission, construction progress,

performance, post-use, decisive phases and manufacture of building materials and items).

3.2 Costs and time required to obtain construction permits

According to the survey, 28,7% of the interviewed companies have moved into new premises in the

past three years. About 3,3% of them had built these spaces, 19,3% have repaired or adjusted them,

while 77,3% used them without making any changes.

The number of companies that have built their premises has been steadily decreasing over the past few

years (only six respondents in the current study).

Obtaining permits for readjustment of premises took on average 9,0 days. Managers spent about 6,5

hours on this process.

Table 6. Time and costs required to obtain permissions to commence

reconstruction works

Have

reported

Amount,

USD

Fees to obtain permission 77% 95

Payments for notary services 29% -

Payments to lawyers and intermediaries 14% -

Transportation expenses 49% 10

“Voluntary contributions” 20% -

Unofficial payments 17% -

After the repairs were completed, the surveyed companies

have spent 9 hours to obtain all permissions required to place into service the renovated spaces (final

approval). The total amount of time spent on procedures was 14 days.

Companies located in Chisinau have

moved more often to new or recently

repaired spaces (33,9%), compared to

those located in the North and South

(below 10%).

About 1/3 of companies in Trade and

Construction moved into new/recently

repaired spaces. The lowest share was

noted in R&D, science, legal, notarial,

consulting segments (22,4%).

29 Construction



Table 7. Time and costs required to obtain permissions to place into service the reconstruction works

Have

reported

Amount,

USD

Formal payments 66% 157

Payments for notary services 17% -

Payments to lawyers and intermediaries 14% -

Transportation expenses 20% -

“Voluntary contributions” 20% -

Unofficial payments 14% -

Around 24% of the companies that used premises without modifying them had to obtain permissions

to use them.


Most respondents stated that they did not notice any changes, for good or for worse, in the construction

sector. Only 3% said that the procedures were simplified (Figure 10).

Figure 10. Perception of changes in procedures governing the use of spaces

Respondents who started using premises in the last three years were asked to assess the difficulties

related to obtaining construction permissions by scoring from 1 to 5, where 1 - no problems and 5 -

significant problems.

The biggest problem revealed by respondents is the lenghty process to obtain permissions (see Table

8), mentioned by around 57% respondents.

Table 8. Problems relating to obtaining permissions for reconstruction and repairs

Problems Share

Complicated procedures 3,1

Procedures taking too long 3,7

High costs 3,0

The need to make unofficial payments 2,5

18

18

16

72

79

81

10

3

3

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2015

2016

2017


30 Construction



Figure 11. Problems relating to obtaining permissions for construction and repairs


As a result of the actions taken to facilitate the construction regulation process, including the

elimination of redundant permissions, there is a slight decrease in the amount of time required to

obtain construction permissions (see Table 9).

Table 9. Average amount of time to obtain permissions and final approval, days

Survey period

Activity

2011 2012 2013 2014 2015 2016 2017

Repairs/renovation 26 38 39 29 31 36 23

-16%

-22%

-23%

-20%

-3%

-14%

-34%

-17%

31%

19%

13%

16%

20%

16%

5%

17%

-80% -60% -40% -20% 0% 20% 40% 60%

Unofficial payments

Cost of procedures

Duration of procedures

Complicated procedures

Significant problem Critical Insignificant No problems

31 Licensing



4 Licensing


The licensing system in Moldova is regulated by framework Law no. 451-XV of 30 July 2001 on

Regulation through Licensing of Entrepreneurship, republished in 2005 and substantially amended by

Law no. 281 of 14 December 2007.

According to Law no. 451/2001, obtaining a license is compulsory in carrying out 48 types of business

activities. These licenses are issued by the following licensing bodies:

Public Services Agency (30 activities);

National Bank of Moldova (4 activities);

National Commission of Financial Market (5 activities);

National Energy Regulatory Agency (6 activities);

National Regulatory Agency for Electronic Communications and Information Technology (2

activities);

Broadcasting Coordination Council (1 activity).

Law no. 281/2007 of 20 June 2008 introduced the notions of:

tacit approval – a license is deemed granted or renewed if the licensing authority does not

notify the applicant within the set time limits;

single window– procedure whereby the licensing authority verifies the authenticity of the

information presented by the applicant/licensee without involving him/her in the process.

Documents required to obtain a license

To obtain a license, the company files a default application with the concerned licensing authority,

containing:

a) general information on the company;

b) type of activity;

c) a statement signed by the applicant to comply with the licensing conditions in carrying out the

activities for which the license was requested and for the authenticity of the submitted documentation.

The following documentation is being attached to the application for license:

a) a copy of the certificate of the state registration of the enterprise or organization;

b) additional documents as provided by legislative acts regulating the licensed type of activity for which

the license is requested.

The request of documents other than those contained in this article is prohibited.

The data in the documents and the information submitted is verified through the single window

procedure.

Decision to issue a license or to reject the application for obtaining a license

The licensing authority decides on the issue/renewal or rejection of the application based on the

application and the documents attached, within a maximum of 5 working days from the registration

date.

32 Licensing



If the application for obtaining a license is rejected, the applicant may file a second application after

removing the causes that led to rejection.

The license shall be deemed granted if the licensing authority does not notify the applicant within the

terms provided by law. If the deadlines set out to notify the applicant of the refusal to register his

application to obtain a license, or of its rejection or approval expires, the applicant can start to operate

the activity s/he requested the license for, provided there was no written notice on the grounds for

refusal to register/application rejection.

Tacit approval procedure applies to all licenses except for those issued by regulatory authorities in the

financial sector (banking and non-banking), in businesses trading firearms, ammunition and

explosives.

Licensing fees

The standard license fee is MDL 3 250.

License validity period

Most often, licenses are issued for a period of 5 years. In other cases, licenses are issued for one, three

or eight years. The validity of licenses for activities that do not fall under the jurisdiction of the Public

Services Agency is established by laws governing the respective license activity.

Law no. 26 of 13 March 2014 has introduced the e-licensing procedure. This allows the applicant, via

a web interface, to send online applications for the issuance/renewal/reissue of a license. The notice of

approval or rejection of the application is also received electronically.

4.2 Number of licenses

Nearly half (42%) of the surveyed companies had a license at

the time of questioning. Of these, 14% companies had two or

more licenses. The average number of licenses per company is

1,4.

The average validity of a license has not changed since last year

- 4,0 years. It is useful to note that in 62% of cases the average

validity period of a license was 5 years.

4.3 Costs to obtain a license

The average amount of time to obtain a license is around 11,1

days. Costs amount to USD 179, of which USD 147 is the

license issuance fee. Time spent by managers to obtain a license

has been relatively short - about 7,5 hours.

Companies in Construction (77,1%) and

Transport (76,7%) are most often

subjected to licensing. The lowest share

of companies having a license is noted

in Trade (27,5%).

The share of companies located in

Chisinau having a license (42,3%) is

similar to the results in the rest of the

country (42,0%).

Also, 41,7% of companies with up to 10

employees have licenses. Companies

with more than 10 employees are more

often required to have a license - 54,2%.

33 Licensing



Table 10. Average costs to obtain a license

Category of payment Have made

payments, %

Amount,

$

Official payments / license fee 87% 155

Expertise and evaluation 31% 41

Notary services 18% 26

Lawyers and intermediaries 19% 52

Unofficial payments 13% 13

Transportation expenses 35% 10

The series median was used to determine the central trend for costs. The calculations in the Table

above were made using the average exchange rate in the last three years.


Interviewed companies were asked to assess the changes that occurred in the licensing process over the

last year (Figure 12).

Figure 12. Perception of changes in the licensing process, %

Most respondents believe that the situation has not changed over the past year.

Respondents who have carried out licensed activities were asked to assess the difficulties encountered

in the process by scoring from 1 to 5, where 1 - no problems

and 5 - major problems. The evaluation results are shown in

Table 11 and Figure 13.

Table 11. Licensing related problems

Potential difficulties revealed Significance

Complicated regulatory procedures 2,6

Procedure takes too long 2,7

High cost of obtaining a license 2,6

Need to perform unofficial payments 2,2

In 2017 the impact of licensing difficulties has practically not changed.

Licensing procedures are perceived as being difficult by about 19% respondents. Over 20%

respondents are affected by the high cost of procedures. About 15% respondents are dissatisfied with

the need to make unofficial payments.

13 74 13

0% 20% 40% 60% 80% 100%

worse no change better

Most often, complaints about the

difficulty of the licensing process were

made by:

1 Companies located in Chisinau

(15,5%)

2 Companies engaged in R&D,

science, legal, notarial and

consulting activities (17,6%).

34 Licensing



Figure 13. Problems related to licensing


Almost all indicators describing the licensing procedure have not changed compared to last year (Table

12).

The share of companies that make unofficial payments has slightly decreased. Costs have changed

insignificantly, the relative difference between the values recorded over the past two years being lower

than the relative fluctuation in the dollar exchange rate.

Table 12. Evolution of costs related to licensing activities

2010 2011 2012 2013 2014 2015 2016 2017

Share of companies subject to licensing 61% 61% 52% 49% 37% 47% 43% 42%

Average number of licenses 1,3 1,3 1,3 1,4 1,4 1,4 1,1 1,4

Time to obtain a license, days 22 18 16 18 14 11 12 11

Average cost, $ 270 240 266 294 401 163 172 179

Share of respondents who made

unofficial payments, %

14% 7% 9% 8% 1% 15% 18% 13%

-12%

-16%

-14%

-13%

-3%

-4%

-7%

-6%

31%

28%

30%

36%

32%

18%

15%

14%

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Unofficial payments

Cost of procedures

Time spent on procedures

Complicated procedures

Significant problem Critical Insignificant No problems

35 Notifying of the trade activity




5.1 General regulatory framework

Trade activities are regulated by Law no. 231 of 23 September 2010 on Domestic Trade. The

amendments brought by Law no. 153 of 1 July 2016 eliminated the authorization requirement of trade

activities. Companies under consideration are currently

required to submit a notification. The notification to initiate a

trade activity is submitted separately for each trading unit

and/or place of sale with the local public administration

authority in person or using the online informational resource

on trading.

5.2 Time required to submit a notification

More than half (54%) of the companies in the Republic of

Moldova work under the Law on Domestic Trade. Three

quarters of them (76%) have filed notifications with LPA to

carry out a trade activity.

The amount of time to prepare and submit a notification was

6,0 days. Managers spent around 4,6 hours for this purpose.

5.3 Perception of the notification procedure

Respondent companies that submitted a notification with local

authorities were asked to assess the process compared to the

previous year, when they were required to obtain authorizations. The answers are presented in Figure

14.

Figure 14. How managers perceive the transition from authorizations to notifications

Just over half of respondents said that they did not “feel” the improvements brought by Law no 153 of

01 July 2016. Around 37% said that the notification process is less complicated than obtaining

authorizations.

Even if not provided for in the legislation, upon filing a notification, authorities still request the same

documentation that was necessary to obtain a trade authorization:

5% 58% 37%

0% 20% 40% 60% 80% 100%


In Chisinau, the share of companies

engaged in Trade activities is 47,8%

compared to the rest of the country -

which reveal a higher share (68,2%).

By sector, the highest share of

companies engaged in Trade activities

are found in Trade (77%) and Industry

(65%).

Companies operating trade activities that

applied for a notification with LPA least

frequently:

By region, companies located

in Chisinau (71,4%)

Based on CMEA, companies

in Transport (50%)

By size of business,

companies with more than 10

employees (63,8%)




Table 13. Documents required at the time of notification

Requested documents Share of respondents, %

Total Chișinău North Centre South

Property act / contract with the lessor 79 73 100 67 86

Regsitration certificate 93 88 100 96 100

Excerpt from the SRC 90 86 98 93 100

Copy of administrator documentation 82 74 96 85 100

The „old” authorization 65 48 89 85 100

Design of commercial spaces 73 62 91 78 100

Other documentation 66 52 89 70 96

As can be seen in the above table, the worst situation is noted in the north and south regions, where

managers have had to travel to the "raion" in order to submit all kinds of documents requested by local

decision-makers.


Over the past years, the procedures regulating the trade activities have improved. This was particularly

possible with the elimination of the requirement to obtain authorizations.

More than one-third of respondents believe that the improvements have simplified the trade-related

regulations. Among the most important benefits were mentioned:

the notification does not need to be “renewed” along with the extension of the lease contract;

the company is no longer affected by the delay due to the examination of submitted documents,

since the trade activity can commence once the notification has been made;

for most companies, the requirement to obtain sanitary permits has been eliminated;

the requirements to obtain approvals from the fire department and the sector praeture (in the

municipality of Chișinău) have been eliminated.

However, the efforts of central authorities to simplify the trade activity were in most cases sabotaged

by local public authorities, which, contrary to the current legislation, continued to request the same

documents that were necessary to obtain a trade authorization. Thus, the effect of the improvements

mentioned above has been diminished by local bureaucracy. This is also confirmed by the 63%

respondents who did not notice any improvement, with some of them mentioning that the situation in

this area has actually worsened

37 Trading across borders





General provisions on customs procedures are contained in the Customs Code of the Republic of

Moldova, approved by Law no. 1149-XIV of 20 July 2000, reissued on 1 January 2007.

All import and export activities require their prior registration with the Customs Service in the

Republic of Moldova.

The Customs Code establishes the rights and obligations of the customs broker, as well as the

situations where his license may be withdrawn.

Repatriation of funds is also covered by import-export operations regulatory area. Even if not directly

related to customs procedures, it is a requirement imposed by Law, which affects the import-export

activity.

Pursuant to Law no. 1466-XIII of 29 January 1998 on Regulation of Repatriation of Money Funds,

Goods and Services Originating from foreign Economic Transactions, the notion of "repatriation of

money funds” is the collection of money from non-resident businesses, within a set time limit, of the

money funds related to exports of goods, provision of services/works to non-residents. The term also

covers other foreign operations and transactions in accounts opened with authorized banks in the

Republic of Moldova. The amount of funds must be shown in the customs declaration, while the costs

of services and works - in the confirming documents (contracts, deeds of works performed or services

rendered, invoice).

Companies that sell predominantly abroad face another procedure – the recovery of VAT.

The refund of value added tax is regulated by Government Decision no. 93 of 01 February 2013. The

company has the right to choose the method of repayment: offset against other tax liabilities and/or

money refund.

The tax authority is obliged to adopt the decision on the procedure for the refund, relying on the risk

criteria stipulated in the Decision. The decision must be taken within 3 working days from the date of

the application for refund was filed.

The state tax authority initiates the thematic inspection as soon as the taxable subject files an

application. Applicants who meet the following four conditions are exempt from this inspection:

1) the subject of taxation has been active for at least two years;

2) the subject of taxation was granted refunding of VAT previously at least twice;

3) the last thematic inspection on the VAT refund revealed that the amount of refunded VAT,

confirmed by the tax authority, is equal to the amount declared by the payer;

4) during the last tax inspection the amount of taxes, duties, compulsory state social insurance

contributions and compulsory health insurance premiums did not exceed 1% of the total

deliveries made during the verified fiscal periods.




The VAT is refunded within 45 days out of which 30 days are spent on verifications and decision

making and 7 days - on the actual refund.

6.2 Import transactions

About 15% respondents carried out import operations over the past three years. On average, an

importer carries out 11,3 transactions per year. In 2017 the share of importing companies has declined,

whereas the number of transactions per company has increased.

6.2.1 Certification costs of imported goods

About 34% importers had to obtain certificates for imported

goods compliant with the standards in the Republic of

Moldova. In 78% cases, companies that had to obtain

certificates of compliance with the standards in the Republic of

Moldova had already been certified under the requirements of

the country of origin.

The certification process of imported goods took 5,7 days. The

amount of time spent to obtain the certificate was 5,1 hours.

Costs amounted to USD 137. About 16% respondents have

paid bribes to obtain a certificate.

A quarter of respondents that had to obtain certificates of

compliance mentioned cases where their goods have been

retained by customs because they lacked certificates of

compliance. One third of respondents obtained the certificate

some time later.

Figure 15 Handling situations of lacking certificate of compliance

Around 40% importers had to obtain sanitary authorizations for imported goods. Sanitary certificates

were issued in 5,4 days. Companies spent 5,4 hours to obtain the certificate.

Goods retained by customs; 25%

Agreed to submit later; 34%

Had the certificate upon arrival of goods;

31%

Do not know; 9%

The highest shares of companies that

carry out import operations are found in

Chisinau (17,2%). In the remaining

regions importing companies account

for 8,5%.

The share of importing companies is

higher (30%) among companies with

more than 10 employees compared to

the share of importers per total

companies employing up to 10

employees (12%).

By type of activity, the largest share of

importers are found in Trade (23,8%)

and Construction (17,1%). R&D,

science, legal, notarial and consultancy

segments are zero rated in this aspect.




6.2.2 Customs costs

In the last three years, customs compliance took 3,1 days to complete. Taxes paid for customs

procedures (excluding customs tax and excise duties) amounted to about USD 307. About 5% said

they paid bribes to facilitate customs procedures.

Table 14. Costs and time to complete import customs procedures

Type of payment Have made

payments, %

Average

amount, $

Days 100 3,2

Official payments, $ 100 307

Penalties 6 -

Unofficial payments 5 -

6.2.3 Perception of import procedures

Companies practically did not notice any improvements in the import conditions (see Figure 16).

About 28% respondents said that procedures have become more difficult this year and only 5%

claimed the opposite.

Figure 16. Perception of changes in import procedures

The problem of the degree of indicative price of goods has shown an upward trend over the past three

years, reaching an alarming level.

Table 15. Most significant problems on import

Elements Survey period

2013 2014 2015 2016 2017

Difficulties related to obtaining permissions and licenses 2,4 1,6 2,1 2,6 2,8

Difficulties with certification 2,7 1,6 2,3 2,7 2,7

Customs procedures 3,0 1,8 2,3 3,2 3,1

High taiffs on customs procedures 3,3 2,3 2,6 3,3 3,0

Unequal terms for importers 2,7 1,9 2,4 3,1 2,9

Corruption in customs 2,9 2,0 2,3 2,9 2,7

Indicative prices for goods 2,7 1,8 2,4 3,1 3,3

Phytosanitary certification 1,9 1,4 1,9 2,1 2,4

Note: difficulties were scored from 1 to 5, where 1 - no difficulties and 5 - significant difficulties.

28% 67% 6%

0% 20% 40% 60% 80% 100%





Nearly every second respondent was dissatisfied with the practice of customs inspectors in using

indicative prices for the imported goods. One third of respondents identified the corruption in customs

as a serious problem. About 40% consider that customs procedures take too long.

Figure 17. Perception of difficulties related to import transactions

6.3 Export transactions

Only 4,9% of respondents carried out export operations in the past three years, with an average 16

operations per year.

An export customs procedure takes 2,1 days to complete. Companies spent USD 105 to complete the

customs process. The median was used to estimate the figure.

Figure 18. Perception of changes in export procedures

Unlike last year, about 19% of respondents mentioned that

export procedures have improved, although 29% claimed the

opposite.


The amount of time spent on customs procedures has

slightly increased over the last year (see Table 16).

Assessing the monthly performance of the customs service

according to the value of the fees paid by the companies has

led to a negative phenomenon for the recent years. Under

these circumstances, where the value of imports does not

-16%

-23%

-26%

-17%

-16%

-22%

-21%

-22%

-3%

-24%

-6%

-10%

-15%

-18%

-7%

-10%

19%

18%

14%

23%

19%

17%

26%

19%

34%

10%

24%

15%

16%

10%

20%

24%

-60% -40% -20% 0% 20% 40% 60%


Indicative prices

Corruption

Unequal conditions

High cost of procedures

Clearance

Certification

Licenses and permissions

Significant problem Critical Insignificant No difficulties

29% 52% 19%

0% 20% 40% 60% 80% 100%


By sector of activity, the largest share of

the exporting companies is recorded in

Industry (10%).

The share of exporters in companies

with up to 10 employees is 4,3% and

8,2% among companies with more than

10 employees.




depend on the performance of customs inspectors and the customs tariffs value is set by the

Parliament, the only leverage with immediate visible effect to increase the performance is the

unjustified increase of prices, which further influences the customs duties .

Table 16. Changes in import-export procedures and regulations

Indicators Survey period

2011 2012 2013 2014 2015 2016 2017

Time spent on customs compliance on import,

days per transaction

1,9 2,7 2,5 2,0 1,5 2,7 3,1

Cost of customs compliance on import, $ per

transaction

144 152 158 261 136 287 307

Time spent on customs compliance on export,

days per transaction

1,6 1,7 2,0 2,0 2,1 1,9 2,1

Cost of customs compliance on export, $ per

transaction

85 89 152 213 37 172 105

42 Certification of goods





Certification of goods is governed by the following laws:

Law no. 20 of 04 March 2016 on Standardization;

Law no. 420-XVI of 22 December 2006 on Technical regulation activity, republished 31

March 2017;

Law No. 235 of 1 December 2011 on Accreditation and Compliance assessment activities;

Law No. 78-XV of 18 March 2004 on Food goods.

The Standards Institute in Moldova is the national institution responsible for standardization in the

Republic of Moldova. The Institute creates technical standardization committees. These committees

develop moldovan standards which are approved by the Standards Institute in Moldova. Moldovan

standards are approved or adopted through decision by the Standards Institute in Moldova.

The decision to apply national standards is voluntary. Only then does a standard become mandatory

(through a legislative act which makes direct reference to this standard) when public concerns such as

protection of life and health, security of people, environment protection and consumers’ interests make

this action necessary. Application of standards is also mandatory for parties that report compliance

with a certain standard through a contract, trademark, declaration, certificate or any other form.

Law no. 235 of 01 December 2011 sets out the regulated areas. In the regulated areas covered by the

EU harmonization legislation, national technical regulations transpose this legislation.

7.2 Certification costs

Only 9% of the surveyed companies have certified goods.

Businesses have two options in the certification process: 1)

certify individual batches of goods or 2) certify mass

manufactured goods. In the first situation the certificate is

granted for a certain quantity of goods, in the second - for a

certain period. Around 60% companies certify individual

batches of goods. The other 40% certify mass manufactured

goods.

By region, the smallest (5,9%) share of

companies that are required to certify

their goods are found in the Central

region. The largest share is accounted

for by companies located in the North

(12,5%).

As expected, by type of actvity,

companies operating in Industry are

most familiar with certification of goods

(25,7%).

On average, every fourth company with

more than 50 employees and every 12th

company with up to 10 employees

certify their goods.




Figure 19 Share of companies that certify goods

The certification of batch goods takes on average 3 days. Preparation and sumbission of necessary

documents take an average 4,5 hours.

The certification of mass manufactured goods takes around 10 days, time spent - 8 hours.

The certification costs of mass-manufactured goods are about USD 122, certification of individual

batches of goods cost less - USD 106.

A company certifies batches of goods an average 1,5 times a year. Mass production is certified

approximately once a year. The average validity period for mass production certificates is 12 months.

The values obtained in this chapter have a high degree of dispersion. The central tendency for costs

was determined based on the median, not the arithmetic average.

7.3 Perception of certification procedures

Over the past year respondents noted minor changes in the certification conditions.

Figure 20. Changes in the certification process

Table 17. Problems faced in the certification process

Problems Share

Certification procedures take too long 2,9

High tariffs to obtain certificates 2,4

High requirements for company's products 2,5

Batches of goods; 5% Mass production;

4%

Do not certify; 85%

Do not know; 6%

23% 64% 14%

0% 20% 40% 60% 80% 100%





More than a quarter of respondents consider that certification procedures take too long to complete.

About 20% of respondents encounter difficulties in meeting the requirements of official standards.

Figure 21. Exporters’ perception of difficulties related to the certification procedures


Only 9% of respondents were required to certify their goods, their share decreasing compared to the

previous years.

In 2017 the certification of individual batches of goods took less time (see Table 18). Due to the small

number of observations and the high data dispersion, a cost trend could not be produced.

Table 18. Changes in the process of certification of goods


2011 2012 2013 2015 2016 2017

Time spent to obtain a certificate for mass

manufactured goods, days 13,0 16,6 11,7 13,2 10,3 10,0

Costs to obtain a certificate for mass

manufactured goods, $ 158 191 158 63 84 122

Time spent to obtain a certificate for individual

batches of goods, days 11,7 12,1 10,3 8,6 7,6 3,0

Cost to obtain a certificate for individual batches

of goods, $ 83 145 124 57 46 106

-7%

-4%

-11%

-13%

-6%

-15%

20%

26%

26%

33%

22%

13%

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

High requirements for company products

High tariffs to obtain certificates

Lengthy procedures to obtain certificates


45 Sanitary operating authorizations





The state sanitary and epidemiological regulation is governed by Law no. 10-XVI of 03 February 2009

on State supervision of public health. Businesses carrying out activities that impact public health are

subject to sanitary operating authorization.

Law no. 153 of 01 July 2016 establishes that trading units obtain an operating sanitary authorization if

they carry out activities set out in Annex no. 4 to Law 231 of 23 September 2010 on Domestic trade.

8.2 Obtaining sanitary operating authorizations

Around 39% of respondents had to obtain sanitary operating

authorizations.

On average, companies apply for sanitary operating

authorizations 1,2 times a year. The process takes 6,7 days.

Related costs are about USD 75. Gathering and submitting the

necessary documents to competent bodies take on average 5,1

hours.

Table 19. Average expenses incurred by respondents to obtain a sanitary authorization

Survey period

Indicators

Have made payments, % Amount, $

2014 2015 2016 2017 2014 2015 2016 2017

Official payments 92 88 93 93 89 47 69 68

Payments to lawyers and intermediaries 4 13 9 9 44 34 13 46

Transport expenses 47 48 34 37 22 19 11 11

“Voluntary contributions” 11 13 9 9 35 17 12 29

Unofficial payments 11 17 9 10 35 16 11 11

Total costs, $ - - - - 102 60 71 75

8.3 Perception of the process to obtain a sanitary operating authorization

As shown in the table below and the above indicators, in the last year no substantial improvements

were observed in the process of obtaining sanitary authorizations. However, it is important to note that

the number of respondents who have noticed improvements is higher compared to the share of

respondents who indicated that the situation has worsened.

Companies operating in Trade (49,8%)

and Industry (47,1%) are most often

required to obtain sanitary operating

authorizations. On the other hand, only

20% of companies in Construction and

21% companies in Transport have this

permissive document.

By region, only 31,7% of the companies

in Chisinau have sanitary operating

authorizations, compared to the 56,8%

share in the rest of the country.




Figure 22. Changes in the process of obtaining sanitary authorizations

According to the data in Table 20 and Figure 23, companies do not encounter major difficulties in

obtaining sanitary authorizations. The situation is similar to last year.

Table 20. Problems faced in the process of obtaining sanitary authorizations

Only 10% of respondents rated the process as being difficult, while 15% think that the process of

obtaining sanitary authorizations takes too long. The share of companies experiencing problems has

increased slightly compared to last year.

Figure 23. Problems encountered in the process of obtaining sanitary authorizations


Both the amount of time and costs to obtain a sanitary authorization vary without providing a trend

(see Table 21).

Table 21. Changes in the process of obtaining a sanitary authorizations


2011 2012 2013 2014 2015 2016 2017

Time for obtaining a sanitary authorization, days 8 8 6 10 9 7 7

Cost of obtaining a sanitary authorization, $ 67 94 71 102 60 71 75

9% 77% 14%

0% 20% 40% 60% 80% 100%


-8%

-8%

-9%

-7%

-1%

-4%

-6%

-3%

27%

40%

40%

43%

54%

31%

28%

31%

-20% 0% 20% 40% 60% 80% 100%

Unofficial payments

Cost of procedure

Time of procedure

Difficulty of procedure

Significant problem Critical Insignificant Not a problem

Problems Share

Complicated regulatory procedures 2.1

Long time to complete the process 2.3

High cost to obtain sanitary certificates 2.1

Unofficial payments 1.8

47 Sanitary certification of goods





The state sanitary and epidemiological regulation is governed by Law no. 10-XVI of 03 February 2009

on Government supervision of public health. Sanitary standards that set out human security and safety

criteria for environmental and occupational factors, of goods and services, of the requirements to

ensure favourable conditions for life and sanitary regulations are regulated by health regulations

developed by the Ministry of Health and approved by the Government. The law establishes the

compulsory adjustment of these regulations to the EU requirements.

Goods and services are subject to the following forms of sanitary authorization:

a) Notification: notifying the authority responsible for supervision of public health on the

marketing of a new product or service and on its features relevant to public health;

b) Sanitary approval: required for the following activities, document projects, goods and

services:

allocation of land for construction/reconstruction;

elaboration of urban certificates for planning, in cases set out exclusively in the current

legislation;

final approval of built/rebuilt premises financed from state or local budgets;

standards of goods and services;

production technologies.

c) State registration: compulsory with goods and services potentially hazardous to human health

and life - chemical, radioactive and biological substances, new food products, drugs,

microbiological diagnostic systems, diagnostics, nutrient media, chemical reagents,

biodistructive substances;

d) Sanitary certification: verifying if batches of goods comply with applicable health regulations.

Sanitary certification implies laboratory investigations of the batch of goods.

Sanitary authorizations of goods and services are performed on request, submitted by interested legal

or natural persons, also based on the sanitary expertise of the documents, goods, services and/or

activities.

Sanitary authorizations imply a sanitary expertise charged as per the list and tariffs for public health

services approved by the Government. Sanitary opinions, registration certificates, sanitary certificates

and sanitary authorizations are issued free of charge.

Trading of goods and services subject to sanitary authorization under the applicable laws, but yet

unauthorized, is prohibited.




9.2 Obtaining sanitary certificates

A relatively small number of respondents (8%) had to obtain

sanitary certificates for their marketed goods.

Two thirds of respondents obtain certificates once a year. On

average, companies apply for a certificate 1,9 times a year.

A sanitary certificate is obtained within 4,9 days from the

application date. Gathering and submitting the necessary

documents to competent bodies took an average 6,0 hours.

Table 22. Average costs incurred by respondent companies to obtain a sanitary certificate

Indicators Have made

payments, %

Amount, $

Official payments 79 59

Payments to lawyers and intermediaries 25 19

Transport expenses 40 17

“Voluntary contributions” 10 -

Unofficial payments 19 11

Total costs, $ - 60,3

The average amount of unofficial payments and of payments to lawyers and intermediaries was

determined by median measure.

Costs of obtaining a certificate is about USD 60. Every fifth respondent admitted to having paid bribes.

9.3 Perception of procedure to obtain a sanitary certificate

In the last year there have been no major changes in the process of obtaining sanitary certificates. More

than three quarters of respondents believe that procedures and conditions related to sanitary

certification have not changed.

Figure 24. Changes in the process of obtaining sanitary certificates

According to the data contained in the Table 20, the process of obtaining a sanitary certificate does not

pose significant problems for companies.

13% 76% 11%

0% 20% 40% 60% 80% 100%


Companies operating in Industry are

most often required to undergo sanitary

certification - 12,9% (of these - 31,2%

are companies in the Food Industry).

By region, companies located in the

North (1,6%) and Centre (4,4%) need a

sanitary certificate least often. A higher

share is noted in Chisinau (7,7%) and

much higher in the South (20,5%).




Table 23. Problems faced in obtaining sanitary authorizations

Problems Share

Complicated regulatory procedures 2.5

Long time to complete the process 2.3

High cost to obtain sanitary certificates 2.4

Unofficial payments 2.2

As shown in

Figure 25, only 13% of respondents said that the process of obtaining sanitary certificates is difficult.

About 18% think that the cost of obtaining certificates is too high.

Figure 25. Problems encountered in obtaining sanitary certificates


Both the time and costs to obtain a sanitary certificate have virtually not changed compared to last year

(see Table 24).

Table 24. Changes in procedures for obtaining sanitary certificates


2016 2017

Time to obtain a sanitary certificate, days 5,6 4,9

Time spent to obtain a sanitary certificate, hours 5,9 6,0

Costs to obtain a sanitary certificate, $ 59 60

-12%

-18%

-11%

-11%

-2%

-2%

26%

27%

41%

36%

35%

25%

21%

16%

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Unofficial payments

Cost of procedure

Duration of procedure

Difficult procedure

Significant problem Ciritical Insignificant Not difficult

50 Phytosanitary certification





Phytosanitary regulation is regulated by Law no. 228 of 23 September 2010 on Plant protection and

phytosanitary quarantine.

If the importing countries impose such a requirement, the phytosanitary control body shall issue

phytosanitary certificates. The phytosanitary certificate shall be issued to the exporter by the

subdivision of the phytosanitary inspection body under whose jurisdiction the goods subject to

quarantine are produced. In order to obtain the phytosanitary certificate, the exporter shall submit, at

least 48 hours prior to shipment, a series of documents:

a) an application requesting a phytosanitary certificate;

b) certificate on the use of phytosanitary products, at the request of the importing country;

c) phytosanitary certificate of the country of origin;

d) copy of fiscal invoice or cargo shipping invoice.

The validity of phytosanitary certificate is 14 days from the issue date. If the inspection establishes that

phytosanitary requirements have been observed, instead of phytosanitary certificate, a phytosanitary

passport is issued to ensure the free movement of imported plants and plant products.

10.2 Obtaining phytosanitary certificates

About 6,2% of respondents had to obtain phytosanitary

certificates. On average, businesses pass this procedure 2,5

times a year.

Phytosanitary certificate are obtained in 2 days. Gathering and

submitting the necessary documents to competent bodies takes

an average 4 hours.

The above average data was calculated based on the median.

The cost to obtain a phytosanitary certificate is about USD 34.

Phytosanitary certification is required

for certain companies in Industry (10%)

and Trade (8,3%). Its share in the

remaining sectors is insignificant.

The share of companies with more than

10 employees that have a phytosanitary

certificate (10,3%) is higher compared

to companies with up to 10 employees

(5,5%).




Table 25. Average costs incurred by respondents to obtain a phytosanitary certificate

Have made

payments, %

Amount,

$

Official payments 69 39

Payments to lawyers and intermediaries 8 -

Transportation costs 44 11

“Voluntary contributions” 18 11

Unofficial payments 10 -

Total costs, USD - 34

10.3 Perception of procedure to obtain a phytosanitary certificate

The share of respondents who noticed certain improvements in the process of obtaining phytosanitary

certificates is higher compared to the share of companies that saw the situation worsen.

Figure 26. Changes in the process of obtaining phytosanitary certificates

Overall, this segment does not generate significant problems for companies. However, one in five

respondents encountered difficulties in obtaining the phytosanitary certificates. About 19% are

dissatisfied with the long process of obtaining the certificates.

Table 26. Problems faced during the process of obtaining phytosanitary certificates

Problems Share

Complicated regulatory procedures 2,8

The process takes too long 2,7

High costs to obtain phytosanitary certificates 2,1

Unofficial payments 1,9

13% 68% 18%

0% 20% 40% 60% 80% 100%





Figure 27. Problems faced in the process of obtaining phytosanitary certificates


Both the time and cost of obtaining phytosanitary certificates remained at the previous year level.

Table 27. Changes in the procedures to obtain phytosanitary certificates


2015 2016 2017

Time to obtain a phytosanitary certificate, days 2,0 2,0 2,0

Time spent to obtain a phytosanitary certificate, hours 3,5 5,0 4,0

Costs to obtain a phytosanitary certificate, $ 35 37 34

-3%

-8%

-8%

-13%

-11%

-8%

34%

42%

24%

18%

37%

26%

16%

16%

-40% -20% 0% 20% 40% 60% 80%

Unofficial payments

Cost of procedures

Duration of procedures

Difficult procedures


53 Inspections



11 Inspections


According to Law no. 131 of 08 June 2012 on State supervision of entrepreneurial activity,

substantially amended by Law no. 230 of 23 September 2016, "the only authorities/public institutions

entitled to initiate and carry out an inspection are set out in the Annex to this Law, within appropriate

limits." The law expressly prohibits "overlapping the scope of inspection by inspection bodies."

The inspecting authority does not have the right to initiate an inspection if it has the necessary

information ascertaining the law compliance or if the information can be obtained from other

inspection and/or supervision bodies, from official records or any other available sources, as well as if

all the other means to establish the business entity’s law compliance were exhausted.

The authorized institution does not have the right to inspect a period longer than 3 years of a business

activity preceding the start date of the inspection. Scheduled inspections carried out during the first 3

years from the state registration date of the person engaged in entrepreneurial activities have advisory

status and will not result in sanctions or restrictive measures, except for cases where very serious

violations of the law are identified.

A single inspection body does not have the right to carry out scheduled inspections more than once in a

calendar year of the same person or object if the person owns several distinct objects, placed separately

from the headquarters and other objects, unless a higher frequency of inspections is required in

accordance with the inspection-scheduling methodology based on risk assessments, applied to the

concerned areas subject to inspections.

11.2 Number and duration of inspections

As a result of the moratorium on inspections carried out by

government authorities, the average number of visits to a

company in 2016 has decreased almost twice, from 3,8 to 2,0

visits per company per year. These numbers do no include the

checks by Police on vehicles. Following the lifting of

moratorium, the number of inspections has increased to 2,9

visits per year.

The overall amount of time spent by inspectors with a

company has increased from 5,0 to 11,5 hours per year, largely

due to the increase in the amount of time of inspections carried

out by the State Tax Service. The average number and duration

of inspections, by particular inspecting body, are shown in

Table 26.

Share of companies subject to State Tax

Service inspection:

By region, only 38% companies

located in Chisinau undergo

inspections, compared to 71,3% in

the rest of the country.

By sectors, the highest share is

reported in Industry (63%) and

Transport (57%).

Companies with more than 10

employees (58,8%) are inspected

more frequently than companies

with up to 10 employees (45,2%).

54 Inspections



Table 28. Average number and duration of inspections

35% of respondents who own a means of transport claimed that the Traffic Police have stopped their

vehicle without any legal reason and proceeded to verify the legality of documents or cargo. Their

share has slightly decreased compared to last year.

11.3 Expenses incurred folowing the inspections

Most of the companies are fined by the State Tax Service -

about 18% per total companies or nearly 40% of the inspected

companies. Their share has increased compared to last year. At

the same time, the share of companies that bribed tax

inspectors decreased from 22 to 6%.

Slightly less than 40% of the inspected companies paid fines

after police visits. More than 18% of those inspected bribed

the police.

Other institutions with a high share of fines are Labour

Inspection, Local and Central Public Authorities, National

Anticorruption Center and the Sanitary-Epidemiological

Service.

Most often bribes are paid following the inspections by local

and central public authorities.

Survey period

State bodies

Share of inspected

companies, %

Frequency, visits

per year

Number of days per

visit

2015 2016 2017 2015 2016 2017 2015 2016 2017

State Tax Service 51 32 47 1,4 1,5 1,4 0,5 0,37 1,03

Fire department (emergency situations) 35 24 38 1,2 1,2 1,3 0,2 0,24 0,33

Sanitary Epidemiological Service 22 14 15 1,3 1,2 1,5 0,2 0,30 0,46

Police 19 12 12 1,5 1,5 1,7 0,2 0,20 0,24

Traffic police 18 8 11 5,0 2,7 2,5 0,1 0,14 -

Price monitoring bodies 11 4 4 1,1 1,4 1,3 0,3 0,38 0,31

Standard monitoring bodies 13 3 4 1,1 1,3 1,3 0,2 0,40 0,41

Environmental Inspection Bodies 16 3 13 1,3 1,4 1,2 0,2 0,26 0,35

Licensing bodies 11 7 8 1,3 1,5 1,3 0,1 0,41 0,31

National Anticorruption Center 8 1 3 1,1 1,0 1,0 0,2 0,31 0,71

Other ministries and departments 12 13 7 1,3 1,8 1,6 0,1 0,41 0,82

Local authorities 17 12 18 1,2 1,6 1,2 0,1 0,23 0,32

Labour inspection 32 15 24 1,3 1,3 1,3 0,4 0,29 0,53

Share of companies inspected by the

Fire Department:

The indicator for Chisinau (28,2%)

and Centre (30,9%) is relatively

moderate compared to North and

South regions, where the share of

companies subjected to inspections

surpasses 80%.

By sector, companies operating in

Industry (58,6%) and Trade

(40,8%) are inspected most

frequently.

Companies verified by Labour

Inspection:

In Chisinau (18,1%) and Centre

(27,9%) the number of inspected

companies is lower compared to

North and South regions - with

45,3 and 52,3% shares

respectively.

Companies in Costruction (40%)

and Industry (28,6%) are verified

by inspectors most frequently.

55 Inspections



Table 29. Share of companies that incurred payments following the inspections in the last year

Fines, % Unofficial payments, %

Share per

total

Share per

inspected

companies

Share per

total

Share per

inspected

companies

Share per inspected companies Survey period 2016 2017 2016 2017 2016 2017 2016 2017

State Tax Service 10 18,4 32 39,1 7 2,7 22 5,7

Fire department (emergency situations) 3 4,9 13 12,9 3 2,5 12 6,6

Sanitary Epidemiological Service 3 2,5 20 16,7 3 1,0 18 6,7

Police 1 4,4 11 36,7 1 2,2 11 18,3

Traffic police (patrol) 4 4,3 44 39,1 4 1,9 26 17,3

Price monitoring bodies 0 0,5 3 12,5 0 0,2 0 5,0

Standard monitoring bodies 0 0,3 4 7,5 0 0,2 0 5,0

Environmental inspection bodies 0 1,4 4 10,8 0 0,5 0 3,8

Licensing bodies 1 0,5 9 6,3 1 1,3 18 16,3

National Anticorruption Center 1 0,5 25 16,7 0 0,3 8 10,0

Other ministries and departments 3 2,1 22 30,0 5 1,6 37 22,9

Local authorities 2 3,5 16 19,4 5 4,4 33 24,4

Labour inspection 3 4,4 16 18,3 3 4,4 20 18,3

The share of companies paying bribes to traffic police, the sanitary-epidemiological service, the fire

department, and the tax inspectors has declined.

11.4 Perception of number of inspections and difficulties

Although the average number of inspections increased compared to 2016, about 28% of respondents

said they received inspections less frequently. About 15% of companies said the number of inspections

was higher compared to the previous year.

Figure 28. Changes in the number of inspections

Only 9% respondents believe that companies are treated equally by the law. Their share has slightly

increased compared to last year. Half of respondents who provided an answer or 42% of the total

believe that the equality of companies before the law is only partially secured.

Around 38% respondents believe that the law is applied selectively at all times, depending on the

attitude of public persons. Another 27% partially agree with that statement (see Table 30).

15% 57% 28%

0% 20% 40% 60% 80% 100%

more no changes fewer

56 Inspections



Table 30. Impartiality of public servants

Yes Partly No Do not

know

All companies are treated equally by the law 9% 42% 34% 15%

The law is applied selectively 38% 27% 15% 19%

Nearly one third of respondents stated that most visits were "scheduled and legally justified". The

share of companies who mentioned various subjective motives - obtaining bribes, economic pressure,

political motives - oscillates between 10 and 16%.

Table 31. Purposes of the inspection visits

Purpose 2012 2013 2014 2015 2016 2017

Inspections were justified, previously announced 3,4 3,0 2,1 2,7 2,2 2,7

Investigation of violations 2,2 2,2 1,4 2,0 2,2 2,4

Soliciting bribes and "voluntary contributions" 2,3 2,1 1,4 2,2 2,2 2,2

Attempts to put pressure on management to take economic

decisions

1,5 1,6 1,2 1,7 2,0 2,0

Abuse of power for unfair competition 1,6 1,5 1,2 1,9 2,0 2,0

Political reasons 1,3 1,4 1,1 1,8 1,9 2,0

Other subjective reasons 1,7 1,7 1,1 1,8 2,0 2,0

Over the past three years, the share of companies verrified for the purpose of resolving various

violations has increased. Unfortunately, the number of companies verified for political reasons is

slowly but steadily increasing.

Most companies believe that state

inspection procedures have not changed

substantially over the past year (see

Figure 29).

Figure 29. Changes in the perception of state

inspection procedures

10% 77% 13%

0% 20% 40% 60% 80% 100%


Perception of changes in the number of inspections compared to

last year:

By region, the number of companies in Chisinau (31,3%) and

Centre (41,3%) that saw the number of inspections decreasing

is higher compared to the number of companies that say the

opposite - 14,9% in Chisinau and 20,6% in the Central

region). Only 8,1% of the companies in the North and 2,4%

in the South noted a decrease in the number of inspections.

The largest share of companies that noticed a decline in

inspections is accounted for by companies working in R&D,

science, legal system, notarial and consulting services

(48,2%) and Trade (31,3%).

57 Inspections




Over the past year, the number of inspections has increased, from 2,0 to 2,9 visits per company. The

time spent by inspectors with a company has increased from 5 to 11,5 hours per year.

Table 32. How inspections have changed

Survey period

Indicators

2009 2010 2011 2012 2013 2014 2015 2016 2017

Average number of inspections per

company 8,2 7,9 4,2 5,2 3,6 6,5 3,8 2,0 2,9

Number of days per year with a

company 10 15 6,5 6,3 4,7 4,5 0,95 0,63 1,44

Table 33. Changes in the share of inspected companies, % per total surveyed companies

Survey period

Inspection bodies

2012 2013 2014 2015 2016 2017

State Tax Service 74 54 58 51 32 47

Fire department (emergency situations) 53 42 56 35 24 38

Sanitary and epidemiologic service 31 18 48 22 14 15

Police 31 22 41 19 12 12

Traffic police 23 20 10 18 8 11

Price monitoring bodies 11 8 5 11 4 4

Standard monitoring bodies 16 10 18 13 3 4

Environment inspection bodies 17 13 22 16 3 13

Licensing bodies 15 9 12 11 7 8

National Anticorruption Center 22 11 8 8 1 3

Other ministries and departments 13 19 10 12 13 7

Local authorities 27 24 20 17 12 18

Labour inspection 54 48 40 32 15 24

Following the lifting of the moratorium on inspections (established in 2016), their number has

increased, but not with the same frequency recorded in previous years. Almost all state institutions

increased their frequency of inspections, with the highest relative increases being observed for the fire

department (over 70%), labour inspection (over 50% increase), environment inspection bodies (a

threefold increase in number).

58 Inspections



Table 34. Frequency of inspections (calculated only for companies inspected by respective authority)

Survey period

Inspection bodies

2012 2013 2014 2015 2016 2017

State Tax Service 1,7 1,4 1,9 1,4 1,5 1,4

Fire department (emergency situations) 1,3 1,2 1,4 1,2 1,2 1,3

Sanitary epidemiologic services 1,6 1,6 1,9 1,3 1,2 1,5

Police 1,7 1,5 3,9 1,5 1,5 1,7

Traffic police 2,8 3,8 6,1 5,0 2,7 2,5

Price monitoring bodies 1,2 1,5 1,1 1,1 1,4 1,3

Standard monitoring bodies 1,1 1,3 1,3 1,1 1,3 1,3

Environment inspection bodies 1,2 1,2 1,4 1,3 1,4 1,2

Licensing bodies 1,1 1,1 1,2 1,3 1,5 1,3

National Anticorruption Center 1,3 1,1 1,8 1,1 1,0 1,0

Other ministries and departments 1,4 1,2 1,5 1,3 1,8 1,6

Local authorities 1,5 1,3 2,7 1,2 1,6 1,2

Labour inspection 1,4 1,2 1,4 1,3 1,3 1,3

Most often, companies are verified by the State Tax Service and the Fire Department (DES):

Table 35. Frequency of inspections (calculated for all companies contained in the sample)

Survey period

Inspection bodies

2012 2013 2014 2015 2016 2017

State Tax Service 1.3 0.8 1,1 0,7 0,48 0,64

Fire department (emergency situations) 0.7 0.5 0,8 0,4 0,29 0,50

Sanitary epidemiologic services 0.5 0.3 0,9 0,3 0,17 0,23

Police 0.5 0.3 1,6 0,3 0,18 0,20

Traffic police 0.6 0.8 0,6 0,9 0,22 0,28

Price monitoring bodies 0.1 0.1 0,1 0,1 0,06 0,05

Standard monitoring bodies 0.2 0.1 0,2 0,1 0,04 0,05

Environment inspection bodies 0.2 0.2 0,3 0,2 0,04 0,15

Licensing bodies 0.2 0.1 0,1 0,1 0,11 0,10

National Anticorruption Center 0.3 0.1 0,1 0,1 0,01 0,03

Other ministries and departments 0.2 0.2 0,2 0,2 0,23 0,11

Local authorities 0.4 0.3 0,5 0,2 0,19 0,22

Labour inspection 0.8 0.6 0,6 0,4 0,20 0,31

59 Taxes



12 Taxes


The tax system in Moldova is regulated by several normative and legislative acts. The principal

document is the Tax Code approved on 24 April 1997, completed in the subsequent years. Currently it

includes ten titles:

1. General provisions

2. Income tax

3. Value added tax

4. Excises

5. Fiscal administration

6. Real estate tax

7. Local taxes

8. Taxes on natural resources

9. Road traffic taxes

10. Other tax regimes

12.2 Administration of taxes

According to respondents, an average of 5,7 types of taxes are

paid in the Republic of Moldova. The number of taxes has

essentially not changed over the previous years.

58 percent of companies employ full-time accountants to

calculate and pay all taxes in due time. Their share has

decreased compared to last year (see Table 36). The share of

those keeping their accounts on their own has fluctuated over the past eight years below 10%. The

decreasing trend in the number of full-time accountants is primarily due to the increasing degree of

digitalization in Finance and Accounting, which also led to a reduction in bureaucracy in this field.

Table 36. The necessary number of accountants to ensure timely and correct payment of taxes

Survey period

Resources

2010 2011 2012 2013 2014 2015 2016 2017

Hire accountants, full time 78% 74% 67% 64% 73% 64% 71% 58%

Average number of full-time

accountants

1,2 1,2 1,2 1,2 1,3 1,2 1,1 1,1

Only part time accountants or

outsourcing

28% 26% 35% 37% 19% 32% 28% 37%

Keep tax records on their own 2% 9% 5% 8% 8% 9% 8% 5%

About 23% of the profit obtained in 2016 by respondent companies was reinvested in 2017. The share

has been steadily decreasing in recent years.

The electronic filing of tax returns and tax calculations has reduced considerably the amount of time

spent on drawing up the statements.

However, in 2017, the time spent on filing statements has slightly increased (see Table 37).

By region, companies in the Centre

(54,4%) and Chisinau (51,1%) employ

full-time accountants less often than

companies in the North (98,4%) and

South (72,7%). Companies in Chisinau

and Central region most often use part-

time or outsourced accountants.

By sector, the largest share of

companies employing full-time

accountants are working in Industry

(72,9%). The lowest share is accounted

for by companies in R&D, science,

legal, notarial and consulting activities

(44,8%).


employees employ full-time accountants

more often (72,2%) compared to

companies with up to 10 employees

(55,2%).

60 Taxes



Table 37. Time spent to submit a statement, hours

Type of tax 2015 2016 2017

Value added tax 2,8 1,8 2,6

Personal Income Tax 2,4 1,7 2,2

Corporate Income Tax 3,3 1,9 2,5

Contributions to National Social Insurance Fund 2,2 1,5 2,1

Landscaping tax 1,6 1,2 1,9

Contributions to National Health Insurance Company 1,8 1,4 1,8

TOTAL 14,1 9,5 13,1

12.3 Main difficulties in paying taxes

The procedure to calculate, report and pay the corporate income tax proved to be the most difficult (see

Table 38). On third of respondents encounter difficulties in paying this tax. It's important to note that

its share has been increasing for the fourth consecutive year.

Table 38. Taxes that generate most difficulties

Problems 2013 2014 2015 2016 2017

Value added tax 2,7 1,7 2,4 2,3 2,7

Personal income tax 2,6 1,6 2,4 2,5 2,7

Corporate income tax 3,0 1,8 2,7 2,8 2,9

Contributions to National Social Insurance Fund 2,5 1,7 2,5 2,3 2,5

Landscaping tax 1,9 1,4 1,8 2,1 2,3

Contributions to National Health Insurance Company 2,2 1,6 2,1 2,2 2,2

Figure 30. Taxes that generate most difficulties

An insignificant number of respondents mentioned certain changes in conditions and procedures

related to the calculation and payment of taxes (see Figure 31).

-11%

-13%

-15%

-18%

-17%

-19%

-2%

-4%

-5%

-16%

-8%

-8%

35%

31%

30%

25%

26%

21%

29%

31%

23%

16%

19%

20%

-40% -20% 0% 20% 40% 60% 80%

Contribution to NHIC

Landscaping

Contributions to NSIH

Income (legal persons)

Income (natural persons)

VAT


61 Taxes



Figure 31. Changes in the tax system

Confirming the above-mentioned indicators, Table 39 shows the main problems related to tax

procedures, assessed on a scale of 1 to 5. The biggest problem is the unclearness of fiscal and

accounting procedures.

Table 39. Problems encountered in the taxation system

Survey period

Problems

2012 2013 2014 2015 2016 2017

Impossibility to project the future number of taxes 3,0 3,3 2,2 2,4 2,5 2,9

The whole fiscal and accounting process is complicated and

unclear

3,1 3,5 2,4 2,8 2,7 3,1

High sanctions for errors 3,5 3,8 2,8 2,9 2,8 2,7

Lack of fixed rules 2,8 3,1 2,2 2,4 2,7 2,5

Total dependence on fiscal inspectors, lack of respect 2,8 3,0 2,0 2,2 2,5 2,1

High tax rates 3,7 3,6 3,3 2,9 2,8 2,4

Unofficial payments 2,1 2,3 1,3 1,9 2,3 2,1


There have been no significant changes in the last year related to the number of taxes to be paid or the

accountants employed by companies. Most respondents did not notice any changes in the terms and

procedures related to tax.

Table 40. Comparing the tax administration system


2011 2012 2013 2014 2015 2016 2017

Average number of taxes 6,1 7,1 7,0 7,5 5,9 5,6 5,7

Number of full-time accountants 1,2 1,2 1,2 1,3 1,2 1,1 1,1

The steadily decreasing share of reinvested profit can have two causes: companies generate less money

or the pessimistic expectations in terms of business environment improvement.

It is worth mentioning that businesses are now less worried about the high tax rates but rather

dissatisfied with the lack of clear procedures and a predictable environment.

8% 88% 4%

0% 20% 40% 60% 80% 100%

more difficult no changes easier

62 Price regulation



13 Price regulation


Government Decision no. 774 of 20 June 2016 on the Pricing of Socially Important Goods is the main

document governing price regulation. In most cases, products can be marketed at free-market prices.

Following the approval of the Respective Decision, only a few food products are now be marketed

with regulated additions.

The government keeps the right to regulate prices for socially important domestic and imported goods

that are marketed with a trade margin not exceeding 20 percent. Exceptions were set for bread and

knot-shaped bread, sold with a trade margin not exceeding 10%.

Socially important goods, both imported as well as domestic, which have undergone processing by

trading units, are marketed with a trade margin not exceeding 40% of the total purchase price/delivery

price.

If the characteristics of the goods are not altered, even if having undergone some type of technological

processing, the seller will not be deemed as a manufacturer.

Regardless of the number of units involved in the supply chain, trade margin's final size should not

exceed the limit set from the purchase price/delivery price.

13.2 The extent of goverment's intervention in price setting

In around 13% of cases companies said that the government

intervenes in setting prices for their goods. The share of sales

at regulated prices varied between 1 and 99% per total, with

an average of 29%.

On average, 3,9% of total sales of the companies in Moldova

were carried out at government regulated prices.

13.3 Perception of price regulation

In 50% of cases, the state intervenes in companies' pricing by

issuing a limit on trade margins (see Table 41). The share did

not change significantly compared to previous years.

Table 41. Methods used by government to control prices

Method 2010 2011 2012 2013 2015 2016 2017

By limiting profitability 21% 11% 19% 20% 19% 20% 15%

By limiting prices 19% 21% 24% 23% 34% 38% 35%

By limiting the trade margin 61% 68% 57% 57% 47% 52% 50%


The largest share of companies that are

marketing goods and services at state-

regulated prices are found in Transport

(27,9%) and Trade (18,5%). The lowest

share is accounted for by companies

carrrying ouy R&D, science, legal,

notarial and consulting activities (5,2%).

Most often, the state intervenes in price

formation in companies located in the

South (25%). In Chisinau, 12,1% of

companies are found in this category.

63 Price regulation



In the last three years, the share of companies whose products were sold at state regulated prices has

undergone minor changes. After the slight decline observed in 2016, the sales volume at regulated

prices has fallen back close to 2015 levels.

In 50% of cases, the state intervenes in companies' pricing by issuing a limit on trade margins.

Table 42. Price regulation in the Republic of Moldova

2010 2011 2012 2013 2014 2015 2016 2017

Share of businesses subjected

to price regulation

31% 26% 24% 24% 17% 12% 10% 13%

Share of prices subjected to

state regulation

18% 10% 8% 10% 10% 4% 3,5% 3,9%

64 Regulation of labour relations





The main legislative documents governing labour relations are as follows:

Labour Code of the Republic of Moldova (Law no. 154-XV of 28 March 2003);

Law no. 847-XV of 14 February 2002 on Remuneration;

Government Decision no. 743 of 11 June 2002 on Salaries of employees in financially

autonomous units;

Government Decision no. 152 of 19 February 2004 on Compensation quantum bonus for work

in adverse conditions;

Government Decision no. 165 of 9 March 2010 on Minimum guaranteed salary quantum in the

real sector.

According to the amendments to Labour Code introduced by Law 254 of 09 December 2011, the

employer is obliged to provide employees with a nominal access permit at the workplace. In his turn,

the employee is required to carry at all times the nominal access permit provided by the employer.

Starting 1 January 2018, the employer will no longer have to approve the staff structure within the first

month of starting the business activity, and further - in the first month of every calendar year. The

employer will no longer have to submit, within 2 months from the date the staff lists were approved, a

copy to the territorial labour inspectorate under whose jurisdiction the business is located.

Starting 1 January 2019, the requirement to complete (paper-based) labour books upon start or end of

employment will be removed.

14.2 Availability of workforce

Three quarters of respondents stated that they have the

required number of employees to meet the needs of the

company at the time of interview. An insignificant number

of respondents said that their company has staff surplus.

Every fourth respondent said they do not have the necessary

number of employees.

The largest number of companies facing

staff shortage are working in Industry

(30%).

By region, the largest share of

companies that are short of staff is

accounted for by Chisinau (26,7%) and

Central region (27,9%).


employees experience staff related

problems to a greater extent (30,9%)

compared to companies with up to 10

employees (22,3%).




Table 43. Assessment of labour force availability

No specific difficulties related to labour relations could be identified given their almost equal shares

(see Table 44).

The requirement to obtain and return the medical insurance policy within the set deadline is no longer

a problem for companies. A small number of companies said they were affected by this problem.

A relatively low number of companies are dissatisfied with the frequent visits of the labour inspection

(16%), even if it has slightly increased compared to 2016 (15%).

Other procedures and problems shown in the Table below were rated as being difficult by a share

ranging between 21 and 23% of total respondents.

Table 44. Assessment of main problems related to labour relations regulation

Problems 2012 2013 2015 2016 2017

Obtaining permission from the Labor Inspection to initiate

the activity

2,2 2,3 2,0 2,1 2,4

Hiring only under an individual contract of employment 2,2 2,4 2,1 2,2 2,5

Obligation to pay the minimum salary 2,3 2,4 2,2 2,3 2,4

Frequent inspections by labour inspection 2,0 2,0 1,8 2,1 2,3

Complicated process of staff reduction 2,2 2,3 1,9 2,5 2,5

Complicated process of staff record-keeping 2,4 2,4 1,9 2,4 2,6

Obtaining and returning the medical insurance policies within

the established deadline

2,5 2,1 1,8 2.2 2.2

Survey period

2011 2012 2013 2014 2015 2016 2017

More than I need 3% 2% 5% 3% 8% 5% 2%

As much as I need 76% 71% 60% 77% 69% 76% 73%

Less than I need 20% 26% 32% 18% 20% 19% 25%

66 Execution of contracts



15 Execution of contracts

Nearly 4% of respondents said that the state intervened

in their conclusion and execution of contracts. With

small fluctuations, the average stood at the same level

throughout 2005-2017.

This area of regulation has a low impact on business

activity (see Table 45).

Table 45. Monitoring the execution of contracts in Moldova

2009 2010 2011 2012 2013 2014 2015 2016 2017

Share of companies whose

contracts were monitored

10% 4% 3% 6% 6% 4% 5% 5% 4%

Most often, the state intervenes in the

process of concluding contracts in

Industry (7,1%), and least often in Trade

(only 1,9% respondents).

In the Northern region, the state

intervened in only 1,6% of the

companies, compared to the 9,1% share

revealed by companies located in the

South region. The indicator for Chisinau

stands at 3,5%.

67 Promotion of personal interests of public servants



16 Promotion of personal interests of public servants

In less than 3% of cases, managers said that public servants have interfered in their business activity.

The extent of intereference has not changed compared to last year and is several times lower compared

to previous years.

Table 46. Promotion of personal interests of public servants

2012 2013 2014 2015 2016 2017

Share of companies claiming that public

servants interfered in their business activity

4% 8% 4% 8% 3% 3%

68 Evaluation of the judiciary system





The settlement of disputes between companies in the

Republic of Moldova is carried out through courts,

according to Law no. 225-XV of 30 may 2003 on Civil

Procedure Code or through arbitration courts, according to

Law no. 23 of 22 February 2008 on Arbitration.

Disputes with government authorities are regulated by Law

on Administrative Contentious (no. 793-XIV of 10

February 2000), republished on 3 October 2006).

17.2 Methods used to settle disputes

In the last two years, one respondent in five had to settle disputes with state authorities or partners.

Their share has practically not changed in the last four years.

Figure 32. Companies that had to settle disputes

In 71% of cases, companies had conflicts with other business entities, the other 29% – with state

authorities.

46% of the companies have filed a lawsuit to resolve the dispute. The share of companies that resort to

illegal methods to solve their problems is steadily declining.

19,9 23,4

31,7 31,5

35,8

18 21 21 20

0

5

10

15

20

25

30

35

40

2009 2010 2011 2012 2013 2014 2015 2016 2017

%

Surveyed year

The highest share of companies that

settled disputes over the past 2 years

was noted in Constructions sector

(37,1%), the lowest - in R&D, science,

legal, notarial and consulting profiled

companies (10,3%).

By region, the share of companies

ranges from 15,9% in the South to 25%

in the Central region.




Table 47. Methods used to solve conflicts, % of companies that had to solve conflicts

2011 2012 2013 2014 2015 2016 2017

Turned to state bodies 31 35 48 14 25 43 34

Filed a lawsuit 52 61 49 69 46 64 46

Illegal methods 14 8 7

Various unofficial, but legal methods 34 27 30

17.3 Assessing the efficiency of using courts

The main reasons why businesses do not turn to courts is the long waiting period for the decision

making and the availability of other, more effective methods. Table 48 shows the results of assessing

the reasons by scoring from 1 to 5, where 1- the least important reason and 5- the most important

reason.

Table 48. Reasons for not going to court

Reasons 2014 2015 2016 2017

Long waiting period 3,1 2,7 2,5 2,5

Decision will be incorrect because the courts are corrupt 2,9 2,4 2,3 1,7

Decision will be incorrect because the court is incompetent 2,3 1,8 2,4 1,7

High costs of court services 2,7 1,8 2,1 1,9

High costs of legal services 2,7 2,0 2,0 1,9

The dispute is not very serious 3,5 2,7 3,2 2,3

Other methods are more efficient 3,5 2,2 2,1 2,4

Court decisions are not enforced 2,4 1,8 1.9 1,5

Around 41% of companies that resolved their disputes in courts were satisfied with the procedures and

the outcome, another 24% were not happy with the result.

On average, respondents rated their satisfaction at 3,17 points on a scale from 1 to 5, which would

result in a 54% satisfaction degree. The indicator has not changed compared to last year.


During the last two years, around 20% of the surveyed economic entities had to settle disputes (with

partners, clients or state authorities). In less than half of cases they took the dispute to court.

Table 49. Efficiency of resolving disputes through courts

2013 2014 2015 2016 2017

Respondents who had to settle disputes,% 36 18 21 21 20

Respondents satisfied with resolving through court,% 49 33 31 48 41

Taking court action, degree of satisfaction 3,25 2,90 2,83 3,15 3,17

Taking court action, degree of satisfaction, % 56 48 46 54 54

The key indicators characterizing the capacity of the judiciary system to resolve commercial disputes

have not changed compared to last year.

70 Conclusions



Conclusions

The general time indicator has maintained its position of last year, following a two percentage point

drop compared to 2015. The indicator quantifies the general perception of managers and entrepreneurs

in terms of attractiveness of the business environment. Another indicator reveals the share of economic

entities that noticed improvements in the business environment, which increased by seven percentage

points as compared to 2016.

Registration process

Procedures for the primary registration of a company have changed insignificantly. Both the amount of

time to register with the SRC and the time spent by entrepreneurs have not changed compared to last

year. Procedures for amending the incorporation documents have been simplified. The two indicators

mentioned above are decreasing.

Only 9% respondents said that registration procedures are difficult.

Regulation in Constructions

The number of companies that build new spaces on their own is steadily decreasing. Only six

companies out of a total 629 have built new spaces on their own.

The number of companies that changed the use of premises has increased: almost 20% of companies

that moved into new spaces or 5,5% per total surveyed companies. Relevant authorizations are

obtained in less time compared to last year.

Licensing

In 2017 there were no significant changes in the licensing conditions, as mentioned by 76% of the

survey participants.

The costs and time to obtain licenses have virtually not changed since last year. The share of

companies that paid bribes to expedite this procedure has declined.

Only one company in five faces difficulties in obtaining the license.

Notification of a trade activity

The efforts of central authorities to simplify trade activities were in most cases sabotaged by local

public authorities, which, contrary to the current legislation, requested the same documents that were

neccessary to issue a trade authorization.

Only 37% of respondents said that notification procedures are easier compared to the process of

obtaining trade authorizations.

Regulation of imports

The conditions for the import of goods have worsened in 2017, as confirmed by about 28% of

respondents, who think that procedures have become more difficult. Both time and cost of import

customs clearance procedures have increased in the current year.

The most problematic aspect revealed by respondents is the customs' practice to calculate taxes on

imported goods based on higher prices than their real value. In consequence, companies pay more in

taxes to contribute to the budget.

71 Conclusions



Regulation of exports

Respondents' perception of procedures regulating exports is divided: almost 20% think that they are

now less difficult, while almost 30% claim the opposite.

The amount of time to complete a procedure is almost equal to the 2013-2016 time indicator.

Certification of goods

Costs of certification of goods have increased significantly over the past year. The amount of time

required to certify individual batches of goods declined considerably, reaching the lowest level

observed during 2005-2017. The amount of time required to certify mass-manufactured goods has not

changed since last year and is 24% lower compared to 2015.

Even though the time has been reduced and the costs have risen, only 10% of respondents are

dissatisfied with overly high amounts of money they have to pay to the certification bodies. Only 26%

think that procedures take too long to complete.

Sanitary operating authorizations

The procedures for obtaining sanitary authorizations have not changed significantly throughout the last

year. Very few (10%) respondents mentioned having experienced difficulties in obtaining this type of

authorization.


The number of companies that were required to obtain sanitary certificates is insignificant: 8% of all

respondents. The conditions for obtaining the certificates are practically the same as last year. The time

has slightly decreased from 5,6 to 4,9 days.

A small number of companies encounter difficulties in complying with related procedures.


Only 6% of all surveyed companies were required to obtain phytosanitary certificates. These

procedures have not changed during the last two years. The share of respondents who mentioned

improvements is practically equal to the share of those who experienced a worsening in this area.

Inspections

Even though in 2017 the moratorium on inspections was not in place, their number increased

moderately, falling below the level of 2015. Instead, the duration of an inspection has doubled

compared to last year and is also a 50% increase compared to 2015.

Taxation system

The most important problem faced by company accountants is the calculation of corporate income tax.

An insignificant number of respondents mentioned having noticed changes in tax calculation and

reporting procedures.

Price regulation

No significant changes in the degree of price regulation were observed between 2015-2017. According

to the survey data, about 3,9% of goods were marketed at regulated prices, 50% of which - by limiting

the trade margin.

72 Conclusions



Regulation of labour relations

An increasing number of companies face shortage of staff, which left behind other difficulties related

to the regulation of labor relations.

Execution of contracts

State's intereference in the process of concluding and executing contracts is a rare practice - 5% per

total. The share of companies whose contracts were verified by state representatives has not changed

throughout 2005-2017.

Judiciary system

One in five respindents had to settle disputes over the past two years with other economic entities or

state institutions. Nearly half of them went to court to settle the disputes. Only 7% turned to illegal

methods to solve the problem, even though less than half of respondents who went to court were not

satisfied with the outcome.

73 Conclusions



Table 50. Comparison of main indicators


2011 2012 2013 2014 2015 2016 2017

General time indicator, % 10 10 11 11 10 8 8

Registration (including changes in the registration

documents)

Time to register, days 15 13 9 10 12 7 8

Costs to register, $ 136 108 112 71 99 99 73

Time to amend the documents, days 9 6 6 8 7 6 8

Construction

Renovation and reconstruction, days 26 38 39 30 31 36 23

Licensing

Average number per company 1,3 1,3 1,4 1,4 1.4 1.1 1.4

Time to obtain a license, days 18 16 18 14 11 12 11

Average costs, $ 240 266 294 402 163 172 179

Share of unofficial payments, % 7 9 8 1 15 18 13

Import

Time to certify imported goods, days 9,6 7,4 5,9 13,2 9,7 6,2 5.7

Expenses incurred to certify imported goods, $ 80 83 120 350 76 202 137

Time to complete customs procedures, days 1,9 2,7 2,5 2,0 1,5 2,7 3,1

Expenses incurred on customs procedures, $ 144 152 158 261 136 287 307

Export

Time on customs procedures, days 1,6 1,7 2,0 2,0 2,1 1,9 2.1

Expenses incurred on customs procedures, $ 85 89 152 213 - 172 105

Certification of goods and services (individual

batches)

Time to obtain a certificate, days 12 12 10 11 9 8 3

Costs, $ 83 145 124 167 57 46 106

Certification of goods and services (mass

manufactured goods)

Time to obtain a certificate, days 13 17 12 10 13 10 10

Costs, $ 158 191 158 311 63 84 122

Sanitary operating authorizations

Share of respondents that obtained sanitary

operating authorizations, % 61 60 53 47 34 34 39

Time to obtain an authorization, days 8 8 6 10 9 7 7

Total costs, $ 67 94 71 210 60 71 75

74 Conclusions




2011 2012 2013 2014 2015 2016 2017

Share of unofficial payments, % 17 27 21 11 17 9 10


Share of respondents who obtained sanitary

certificates, % 8

Time to obtain a certificate, days 5

Total costs, $ 60

Share of unofficial payments, % 19


Share of respondents who obtained phytosanitary

certificates, % - - - - 7 6 6

Time to obtain a certificate, days - - - - 2 2 2

Total costs, $ 35 37 34

Share of unofficial payments, % - - - - 10 9 10

Inspections

Average number of inspections per company 4,2 5,2 3,6 6,5 3,8 2,0 2,9

Average annual time of inspections, days 7 6 5 5 0,95 0,63 1,44

Administration of taxes

Employ full-time accountants 74% 67% 64% 73% 64% 71% 58%

Number of permanently employed accountants 1,2 1,2 1,2 1,3 1,2 1,1 1,1

Price regulation

Companies subjected to price regulation, % 26 24 24 17 12 10 13

Average share of prices regulated by the state 10 8 10 10 4 3,5 3,9

Execution of contracts

Companies subjected to regulation of contracts, % 3 6 6 4 5 5 4

Judiciary system

Share of respondents that turned to state

institutions to settle disputes, % 31 35 48 14 25 43 34

Share of respondents that turned to courts to settle

disputes, % 52 61 49 69 46 64 46

Share of respondents that used illegal methods to

settle disputes, % - - - - 14 8 7

Share of respondents that used unofficial, though

legal methods to settle disputes, % - - - - 34 27 30

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