ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of November 24, 2003 No. 1390

About approval of the Regulations on procedure and conditions of exemption of the income tax, received by commercial banks on the loans granted for a period of 2 up to 3 years and for the term of more than 3 years

In pursuance of part provisions (14) article 24 of the Law on enforcement of Sections I and II of the Tax code N 1164-XIII of April 24, 1997. (The official monitor of the Republic of Moldova, 1997, N 62, of the Art. 524) and for the purpose of regulation of procedure and conditions of exemption of the income tax, received by commercial banks on the loans granted for a period of 2 up to 3 years and for the term of more than 3 years, the Government DECIDES:

Approve Regulations on procedure and conditions of exemption of the income tax, received by commercial banks on the loans granted for a period of 2 up to 3 years and for the term of more than 3 years it (is applied).

Approved by the Order of the Government of the Republic of Moldova No. 1390 of November 24, 2003

Regulations on procedure and conditions of exemption of the income tax, received by commercial banks on the loans granted for a period of 2 up to 3 years and for the term of more than 3 years

I. General provisions

1. Regulations on procedure and conditions of exemption of the income tax, received by commercial banks on the loans granted for a period of 2 up to 3 years and for the term of more than 3 years (further - provision), and also procedure for issue of such credits are developed according to part provisions (14) article 24 of the Law on enforcement of Sections I and II of the Tax code N 1164-XIII of April 24, 1997 (further - the law) (with the subsequent amendments and changes).

2. Action of this provision extends to the commercial banks granting the loans for a period of 2 up to 3 years and for the term of more than 3 years to the economic agents performing investments for:

a) purchases of fixed assets for the purpose of their use in economic activity of the companies;

b) contractings of contract works and inzheneringovy services;

c) purchases and conversions of agricultural products;

d) designings, developments, development and implementations of the new equipment and technologies;

e) reshaping and retekhnologization of production process;

f) landings and updates of long-term plantings;

g) purchase and maturing of raw materials and alcohol for wines and divin (cognacs).

3. The commercial banks specified in Item 2 this provision based on part (14) article 24 of the law are completely exempted from the tax discharge on the profit got from loan granting for the term of more than 3 years and for 50% - on profit on loan granting for a period of 2 up to 3 years.

4. The credits for the terms established by part (14) article 24 of the law, can be provided from own resources of commercial banks and (or) from the attracted resources, including centralized resources of National Bank of Moldova. The loan interest rate, provided according to Item 2 this provision, is established by commercial banks according to domestic credit policy, except for the loans granted from resources of National Bank of Moldova on which the interest rate is established in the amount of basic percent of National Bank of Moldova on the loans granted for the long term, plus of at most 5%. In case of non-compliance with these conditions by commercial banks they cannot use the privileges on the tax discharge for profit established by part (14) article 24 of the law.

5. The credits for a period of 2 up to 3 years and for the term of more than 3 years can be provided both in national, and in any foreign currency, with observance of the conditions established in the Civil code N 1107-XV of June 6, 2002, the Law on N 550-XIII financial institutions of July 21, 1995, Regulations of National Bank of Moldova on credit activities of the banks functioning in the Republic of Moldova (The resolution of Administrative board of National Bank of Moldova N 153 of December 25, 1997), Instructions N 8/1001 about procedure for loan granting in foreign currency (The resolution of Administrative board of National Bank of Moldova N 8 of February 2, 1996) (with subsequent changes) and other regulations of National Bank of Moldova.

6. The privileges specified in Item 3 this provision are applied in case of profit earning from loan granting for a period of 2 up to 3 years and for the term of more than 3 years, irrespective of loan granting source.

II. Basic concepts

7. In this provision the following basic concepts are used:

inzheneringovy services - works on the project documentation, designing and construction, organizational services in maintenance;

development and implementation of the new equipment and technologies - the organization of process of knowledge acquisition by the working personnel, the organization of the corresponding qualification rates for commissioning of the equipment and technologies in exchange morally and physically obsolete;

reshaping - process of implementation of packet of technological, production, financial, organizational, operational and legal measures for change of profile of activities of the company;

production process retekhnologization - replacement morally and physically obsolete equipment, improvement of the organization and structure of production, enhancement of the service equipment and services, mechanization and automation of production, implementation of other organizational and technical measures aimed at providing increase in production, expansion of the range and increase in its quality, work gain in productivity, decrease in product cost.

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