Moldova sugar producers warn of industry collapse over proposed VAT hike

The Union of Sugar Producers of Moldova (UPZM) has warned that the domestic sugar industry faces potential collapse if the Parliament approves a significant increase in Value Added Tax (VAT). The proposed fiscal policy would raise the VAT rate for sugar from 8% to 20%, a 150% increase from the current rate.

Producers estimate that this tax hike could lead to an 11% increase in retail sugar prices. Executive Director Inga Pascal stated that the tax increase is occurring alongside other economic pressures, including high energy costs, difficult agricultural years, unregulated imports from Serbia and Belarus, and a lack of promised support for farmers.

UPZM argues that the proposed 20% rate would be higher than those in several EU member states, such as Germany (7%), Romania (11%), and Italy (10%). They also warned that the measure could jeopardize over 130 million euros in European investments and stimulate informal trade and cross-border smuggling.

Separately, economic experts in Moldova have warned that annual inflation, currently around 7%, could rise to between 9% and 10%. This potential surge has prompted the National Bank of Moldova to increase the base rate to 9% to mitigate further price acceleration.