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We would like to point out that the two draft laws, which provide for tax concessions for the media, developed by the Parliamentary Group, were registered in the Parliament as a legislative initiative on 26 July this year by four MPs – Speaker of Parliament, Andrian Candu, Vladimir Hotineanu, Corneliu Mihalache (PDM) and Eugen Carpov, non-attached MP.
Amendments and addenda to the Tax Code
According to the Briefing Note, the first draft law provides for tax concessions for media institutions by: providing tax exemptions for the revenue earned from media-related activities; providing tax exemptions for the income earned by media institutions’ employees exceeding an average monthly salary forecast by the Government; postponing the VAT payment until the month following the receipt of payments; including in the notion of royalties the payments for the procurement of software intended solely for the operation of that software. The last proposal envisages certain exemptions for using software, that are linked to the broadcasting activity and represent a creative process integrated into the creation of works in this sector.
The authors also propose to supplement the Tax Code with a new provision, according to which the media ‘having legal personality and properly registered, are exempted from the tax on income obtained from the direct performance of the activity under the license for broadcasting and/or creation of audiovisual works intended for the formation of program services and/or for the publishing and dissemination of periodicals and/or for the dissemination of information by any means of communication.’
Reinvestment of the earned income
The legislative initiative also provides for measures to encourage reinvestment of broadcasters’ and audiovisual producers’ income. In this respect, it was proposed to exempt these taxpayers from the tax on income obtained from the direct performance of the activity or the creation of audiovisual works intended for program services.
Also, for employees of broadcasters, producers of audiovisual works, periodicals and press agencies, a reduction in income tax is provided if certain conditions are met, that would apply for the 2019–2025 tax period.
The Government does not support the draft
Following the analysis of the initiatives, the Government decided not to support the draft law submitted for endorsement. The Cabinet of Ministers considers that the tax regimes that provide for special provisions different from the general ones entail economical and social risks, creating a dangerous precedent.
The Executive fears that other economic entities might wish to operate in a specific and facilitated regime as well. The Government also believes that the rules set out in the draft law seriously infringe the principle of fiscal fairness, since they include provisions that exempt only media employees from income tax.
Regarding the need to establish ‘tax concessions for national and international investors that invest in the media’, the Government believes that the tax regime is not a prime factor in determining the investment attractiveness and mentions that Moldova has one of the lowest corporate tax rates in the region (12%), after Bulgaria (10%).
Concessions on paper for the printed press as well
The second draft rejected by the Government refers to creating favorable conditions for periodical publications, including the exemption from postal tariffs. Lawmakers propose to amend the Law on Postal Communications by adding the article that would provide for the distribution fee concessions amounting to 50% of the flat rate. Another amendment concerns the provision of more favorable terms and prices in using paper for publishing periodicals of social importance. MPs also propose to reduce the rental price of premises in state-owned buildings for periodicals of social importance.
Definition of the ‘periodical of social importance’ notion
Members of Parliament also drafted a separate provision on the criteria, determining which publications can be called periodicals of social importance. Such publications should contain at least 80% of materials produced by the editorial offices of the Republic of Moldova and/or created by independent journalists from Moldova, including through country’s technical and intellectual means.
The publications that address analytical topics, journalistic investigations, promote transparency, democracy and human rights, comply with the provisions of the Code of Ethics and contain topics of public interest at regional level are considered to be of social importance as well.
The explanatory memorandum accompanying the negative endorsement of the Government states that the tariffs established by ‘Posta Moldovei’ State Enterprise for the distribution of periodical publications have not been modified since 2013, thus leading to the increase of losses of ‘Posta Moldovei’ SE rather than to the increase of the editorial costs. Thus, the Government claims that the endorsement of the addenda proposed by the MPs would make the situation of ‘Posta Moldovei’ SE much worse and the losses from the provision of the of periodicals distribution service would further increase as a result of the decrease by 50% of the tariffs for the distribution of domestic periodicals of social importance. The Government states that the company would incur additional annual losses of another MDL 2.4 million, and the total losses from the provision of the service would thus reach MDL 13 million.
Veaceslav Perunov, director of Balti SP newspaper: ‘The Government has demonstrated that it does not need independent press’
Veaceslav Perunov, director of Balti SP newspaper criticizes the Government’s attitude towards this draft law. ‘The Government once again showed that no one needs independent press. They have their own pocket press instead’, says Perunov.
The journalist claims that independent journalists would continue to fight to make the state change its attitude towards the press. ‘They should take their cues from countries that support independent media through funds and other means. For example, young people in France are subscribed to the private press from public resources; I could give other examples as well. Nothing is ever done in our country’, says Perunov.
According to him, many such initiatives are just smoke and mirrors that do not lead to any results.
Opinion on Government endorsements of the APEL Executive Director Ion Bunduchi: ‘We should expect the worst for the media’
‘It is rather ironic that a certain draft law prepared by the Working Group on improving the legislation, created by the Parliament, is rejected by the Government. It is also worth mentioning that the authors of the negative endorsements, wherever they might come from, could attend the working group meetings and suggest to the authors (mainly civil society representatives): gentlemen, do not work in vain, we do not want reforms; or – gentlemen, develop drafts that will not change anything; or – gentlemen, take it easy, we know what to do; or... It wasn’t anything like that! Too bad. Personally, I sometimes believed that the authorities sincerely wanted to make a change in the media sector, at last. Now, I read the endorsements and see that our effort, yet again, has been in vain.
As a matter of fact, the Government had and should take care of the development of all social institutions, including the media. All governments (at least since 2009 and to this day), however, have undertaken to develop media in every direction... only on paper. Back in 1995, when it asked to join the Council of Europe, the state has made a commitment to develop the country, including its media sector, on the basis of European principles. Again, the authorities should be the ones to make the effort, since they are the only ones responsible for the act of governance, and, let us not forget, for honoring the assumed commitments.
As for the arguments given in the endorsements – these do not stand up to criticism. The Government, which represents the executive power, can do anything, even empty three banks, without invoking as many laws, as it does now. These laws, allegedly, may not be changed, and if they are, it would undermine fair competition, collection of taxes from media, etc. The question (both ironic and depressing) is the following: is there really any loyal competition, at least in the media segment or any related segments (advertising, copyright, etc.)?! What exorbitant taxes are we talking about when we talk about the media?! If a media institution disappears due to the lack of state care and therefore would not be able to pay taxes anymore, would the budget contributions increase or decrease?! Why are the governments of other countries able to do this, and our Government is not? Besides, a media outlet, as an economic entity, should in no case be treated as a gas station. If you are out of gas, you can leave your car and walk. If you are out of media, you do not know where to go, because all our actions are guided by the information we have, and the information is mostly provided to us by the media, whether we understand and recognize this fact or not. Rejecting draft laws leaves the economic condition of the media unchanged.
The consequences are predictable – further disappearance of media institutions, those local/regional ones in particular. A 2015 civil society survey (newer ones do not exist, and the Government does not care) shows that the local/regional broadcasters’ turnover constituted 3.8% of the total turnover of broadcasters in the country. Did this outrageous state of affairs really matter to the governance? Thus, we should expect the worst for the media.’
