Introduction:

The Republic of Moldova is a small, densely populated country, which gained its independence and became a sovereign state on 27 August 1991. It is a landlocked country in Eastern Europe. It is bordered by Romania to the west and Ukraine to the north, east, and south. The capital city is Chisinau (Chi?inau).

Teritory:

The distance between the North and the South extremities is 350 km, and from East to West is 150 km. Moldova shares borders with Romania and Ukraine.

Moldova is currently divided into 37 first-tier units, including 32 districts, three municipalities (Chisinau, Balti, Bender), one autonomous territorial unit (Gagauzia) and one territorial unit (Transnistria).

The capital and largest city is Chisinau. Moldova has 66 cities (towns) and 917 communes.

Some other 699 villages are too small to have separate administration, so are administratively part of either cities (40 of them) or communes (659). This makes for a total of 1,681 localities in Moldova.

Overview:

Moldova is a small lower-middle-income economy. Although the poorest country in Europe, it has made significant progress in reducing poverty and promoting inclusive growth since the early 2000s. The economy has expanded by an average of 5% annually, driven by consumption and fueled by remittances. The latter account for a quarter of GDP, among the highest shares in the world.

Key areas for investments:

  • Industrial parks
  • IT parks
  • Free Economic Zones

Legal system:

The Republic of Moldova is a civil law country. Its legal framework is based mainly on statutory law. The leading legal acts are the Constitution, organic and ordinary laws approved by the Parliament, as well as other normative acts issued by the Government and other public authorities. Under the Constitution, the Republic of Moldova undertakes to respect the treaties and conventions to which it is a party. In the event of any discrepancies between the national and international legislation applicable for the Republic of Moldova, the latter prevails.

Moldova on international arena:

Republic of Moldova is a member of a key organizations as follows:

  • United Nations (UN)
  • Council of Europe
  • The International Bank for Reconstruction and Development (IBRD)
  • The European Bank for Reconstruction and Development (EBRD)
  • World Trade Organization (WTO)
  • Commonwealth of Independent States (CIS)
  • Energy community Treaty
  • Organization for Security and Cooperation in Europe (OSCE)
  • Organization of the Black Sea Economic Cooperation (BSEC)

International Agreements:

The Association Agreement with the European Union European Integration is a fundamental priority of Republic of Moldova domestic and foreign policies. On 27 June 2014, Moldova signed an Association Agreement with the European Union which includes a gradual implementation of a Deep and Comprehensive Free Trade Area (DCFTA). It entered provisionally into force as of 1 September 2014.

The DCFTA agreement assumes gradual abolition of duties and quotas in mutual trade in goods and services, as well as the elimination of non-tariff barriers (by the adoption of EU rules on health and safety standards, and intellectual property rights, among other means). This will allow the integration of Moldova with the EU internal market.

In 2006 Moldova signed the Central European Free Trade Agreement (CEFTA 2006), which came into force for our country in 2007. CEFTA allows duty free access to the market of countries from the South Eastern part of Europe. The CEFTA agreement has radically evolved since Romania and Bulgaria left and joined the EU.

Double Tax Treaties and Mutual Protection of Investments Treaties

  • Moldova has signed comprehensive double taxation agreements with 50 countries, of which 48 are in force.
  • The Double Tax Treaties may provide for more favorable tax regimes than those provided by the local legislation. As guidance on the interpretation of Double Tax Treaties and, correspondingly, for tax administration purposes, the Commentaries to the OECD Model Tax Convention on Income and on Capital are used by the tax authorities and taxpayers.
  • Additional guarantees and support to investors are offered by 39 bilateral treaties signed between Moldova and various countries for the mutual protection of investments.

Economy profile:

Moldova has seen little foreign direct investment in its short two decades of independence, while the country has struggled with massive outward migration, and an occasionally bumpy business environment for those attempting to build a lucrative enterprise.

As far as ease of doing business goes, Moldova is good at enforcing contracts and making it easy and affordable to register a company, but the country has fared worse when it comes to trading across borders, protecting investors or paying taxes. Addressing these and other challenges facing the country have been the focus of World Bank support. Policy dialogues to build a competitive and liberalized business environment have been flanked by efforts to support the promotion of exports, adopt international quality standards and provide private enterprises with access to financing.

Proximity to the European Union is the country's undisputable advantage, but to fully realize this opportunity, Moldova needs to produce higher quality and more competitive exports. The World Bank Competitiveness Enhancement Project aims to help the government position Moldova as a competitor in outside markets and a desirable investment destination by enhancing Moldova's private sector through improvements in access to finance and higher standards and quality.

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