VAT rate of 8% on the whole value chain of solid biofuels starting with January 2017

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A VAT rate of 8% was established on the whole value chain of solid biofuels starting with January 2017. The respective amendment to the budgetary-fiscal and customs policy for 2017 was recently approved by the Parliament. According to the document, the 8% VAT will be charged on the supply of solid biofuels, as well as the on the raw materials supplied for the production of solid biofuels (agricultural and forestry products, wood waste).

The standard VAT rate of 20% was applied on the biofuel so far, and a rate of 8% – on the natural gas. This measure equalised the previously discriminated bioenergy field with the gas sector and will give a new impetus to its development.

This decision was expected by biofuel producers and it represents a concrete step made by the authorities towards promoting the production of energy from local sources. It is important to encourage this sector that helps us reduce the dependence on the foreign energy and to develop our economy, by creating new businesses and jobs, stated Ludmila Abramciuc, manager of a briquette production line in Bălţi municipality.

It is worth being noted that, having started from scratch, the biofuel production sector has grown over the past five years, and over 100 companies for the production of briquettes and pellets have been launched. The monitoring conducted by the Energy Efficiency Agency and the Energy and Biomass Project points out that 70 of them are still active in this sector.

The Energy and Biomass Project propelled the development of the biofuel production sector through leasing arrangements. 35 companies benefited from biofuel production lines, shredders or balers in favourable conditions: 0% rate for the VAT, bank commissions and other fees, a three-year period of reimbursement. A total amount of 1 million Euro were allocated for this purpose from the European funds”, Victor Cotruţă, manager of Energy and Biomass Project, stated.

The start up of new businesses in the field of biofuel production was driven by the increased demand of the market. Currently, more than 190 schools, kindergartens, hospitals in the Republic of Moldova are connected to biomass heating systems built with the support of the European funds provided by the Energy and Biomass Project. In addition to it, in the framework of the same project, over 1 000 families benefiting from subsidies of nearly 1000 Euros granted by the European Union for the purchase of biofuel heating plants.

The Moldova Energy and Biomass Project is a seven-year project implemented during the period 2011 – 2017. The project’s aim is to contribute to the production of safe, competitive and sustainable biomass energy, the most viable and accessible renewable energy source in the Republic of Moldova. The Energy and Biomass Project is funded by the European Union and implemented by the United Nations Development Programme.

For more information about the Energy and Biomass Project, see  website and the  Energie din Biomasă   Facebook profile.

Note: Another novelty of the budgetary-fiscal policy for 2017 is the annulment of the 20% VAT on electric cars. Previously, because of the VAT value, the costs of the electric cars were noncompetitive, compared to the internal combustion engines, whose excise tax is charged depending on the engine’s capacity and age. Thus, those who will buy electric cars, will pay 20% less for their import starting with 2017.