Moldovan Banks Association (ABM) asks to exclude from the draft tax policy the increase from 3% to 12% of the tax rate, which is levied on individuals’ deposits.
In a widespread message, ABM has expressed concern about the proposal of the Ministry of Finance to increase from 3% to 12% the rate of income tax on interest on deposits imposed on individuals. This will adversely affect the financial sector and the majority of the population, especially those of the retirement age. ABM noted that despite the efforts of the National Bank to curb consumption and stimulate savings by increasing the base rate, the volume of term deposits attracted from the citizens during 10 months of this year throughout the banking system, decreased by 1.8 billion lei, compared to the same period of the previous year. ABM believes that such a significant increase of the tax rate will make it difficult to attract deposits, making the formation of savings unattractive. According to estimates based on international studies, a 4 times increase of the tax rate will cause an additional 680 million lei reduction of term deposits (they will be transferred into cash or to other countries), without taking into consideration the uncertainties we are facing at the moment. The proposed tax measure will have a negative social impact on the population. "While analyzing the profile of depositors in the banking sector, we can see that deposits are distributed in small amounts, with most of the beneficiaries being people of retirement age. Thus, 99.9% of depositors have deposits earning interest not exceeding the personal exemption of 27 thousand lei (the amount of untaxed income), which represents 82% of the total amount of interest paid to citizens. At the same time, half of the total amount of interest is paid to citizens over 60 years old, and this category represents 25% of the total number of depositors. These estimates show that the profile of citizen depositors in Moldova does not necessarily belong to the category of high-income individuals, and the tax increase will affect a significant number of individuals," ABM reported. The organization stressed that the energy crisis caused by the regional conflict has led to an unprecedented rise in prices and the government's challenge is the lack of available income to cover this increase, so the authorities resort to programs of support and compensation for energy tariffs. At the same time, against the background of rising prices and lack of income, a large number of citizens will see their income from interest on bank deposits decrease. Therefore, the Moldovan banking community asks to exclude from the draft fiscal policy the initiative to increase the income tax rate, which is imposed on income from individuals' deposits. Let us remind that the business associations had made a similar request earlier. // 29.11.2022 – InfoMarket
