Is it a terrace or a restaurant? Isn’t there a desire to pay less taxes?

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The selection of “Objora” terrace as an object for analytical investigation is not at all random. The schemes that are used in “Objora” can be seen in other establishments of the mun. Balti. In 2019, the local government sent an almost three-fold increase in the real estate tax rate to supplement the Balti budget. But at the same time prolongs the contracts of little costs for the lease of land in the central part of the city for local oligarchs.
Like previous materials, our investigations are based on the official responses of the Balti municipality.

Like previous materials, our investigations are based on the official responses of the Balti municipality.

Whose land and the price of the question

The land under the terrace is rented. The area rented is 300 sq. m. Here is a copy of the cadastral map of the site:

The contract for the lease of this square-lot behind the central station became possible on the basis of Decision Nr.5/47 of 29.09.2011 of the Balti Municipal Council, which is signed by the following officials of the Balti municipality:

  1. Panchuk V. T. –  a former mayor of the Balti municipality, honorary resident.
  2. Dovgan L. S. – Secretary of the Council.
  3. Rubtsov S. S. – at that time, the Chairman of the session of Balti Council.

The rent price of the 300 sq.m of land in the heart of Balti is quite ridiculous – 1,356 lei per year. Thus, the owner pays 300 sq.m. in the centre of the northern capital. The price per square metre is 37 bani per month. Here is a copy of the original 2011 lease:

Here is a copy of the last contract, extended until 2023 under the same “very advantageous” terms, signed by former Mayor Nikolai Grigorishin, who currently holds the position of Vice-mayor:

As we can see, the classic contract scheme is applied here at a minimum of 2% of the normative value of the land, although from the owner in person IP «Parnavel Igor» it was easy to get 5 times more by rewriting the lease contract at 10% of the normative value of the land.

Since November 15, 2011 for rent of 300 sq.m 12,552 lei was paid to the Balti treasury, however, this sum could amount to 62,760 lei if the original claim was 10% of the nominal value of the land, rather than 2% as in the current contract. Here’s a copy of the rent charges on this piece of land:

We built, built and finally built… To what type of structures is «Objora»?

What this catering establishment really is, and what it says it is – is a very complicated story in which the officials of the mayoralty are frankly confused. According to the documents of the terrace “Objora” is a dining hall from the shop “Objora”, adjacent to it on the side. So this is on the documents signed by the Head of the Department of Commerce of Balti Mayoralty Natalya Romanenko. Here’s a copy of this answer:

The beginning of the construction of the terrace “Objora” began with the receipt of the “Urban Planning Certificate for Design”, which specifies a very specific end goal – “Design of the open terrace to the existing commercial object”. Here is a copy of this document:

The town planning certificate Nr.966 of 09.11.2011 for the future terrace is signed by the following officials of the region:

  1. Panchuk V. T. – former Mayor of Balti
  2. Mahu O. J. – former Vice-mayor
  3. Serdiuk I. M. – current Secretary of the Municipal Council
  4. Koada V. M. – former chief architect
  5. Bukataru Y. V. – former Chief, Civil Engineering and Architecture Division

We can also see prescriptions that were not followed by the developer:

  • Decorative fencing not more than 0.7 m (instead we see capital walls);
  • Prefabricated structures;
  • Existing engineering networks (in the terrace “Objora” two main toilets were constructed for which new sewerage networks were carried out)

According to all documents that were agreed by the regional services, this object passed as “Open-type terrace to the existing object”. That is, as a terrace to the store, and not, as we assume, as an autonomous catering facility with restaurant-level services.

After the receipt of the certificate, the individual enterprise “Parnavel Igor” is issued the Building Permit Nr.358 from 30.11.2011, signed by the following officials of the Balti Mayoralty:

  1. Panchuk V. T. – former Mayor of Balti
  2. Mahu O. J. – former Vice-mayor
  3. Serdiuk I. M. – current Secretary of the Municipal Council
  4. Koada V. M. – former chief architect
  5. Bukataru Y. V. – former Chief, Regional Architecture and Construction Division

A copy of Open Terrace Building Authorizations, Nr. 358, from 30.11.2011, is enclosed:

Few of the citizens remember what was at the place of this building. However, the “Master Plan of Development” will help refresh the memory:

As can be seen from the master plan, on the place of what in the Mayoralty is called the “shop terrace”, previously there were about five trees and two flower beds of roses.

The project received in 2011 the agreement of municipal enterprises «BIO» and «DRCD», where there is also a mention of “open terrace”. Here’s a copy of the agreement:

And here is the scheme of the project “shop terraces”, which has been agreed with the services of the mayoralty and municipal enterprises:

As we can see, the scheme presented and approved is fundamentally different from the one that the citizens see in front of them. Special attention to the marked three entrances to the terrace from Dostoyevsky and Stefan cel Mare streets. People had to enter the terrace without doors, as is the case on open terraces. These fragments of the scheme are highlighted by special arrows:

The space between the shop and the terrace was not to be built according to the plan, and there should be an open area paved with pavement tiles. This territory is now occupied by the so-called “terrace”.

A huge tax difference – a restaurant or a terrace?

The terrace «Objora» is not the only one that according to the documents of the shop terrace, but inside it is, as we believe, a fully-fledged restaurant. And the responses from the mayoralty officials show contradictions. This is the reply of Natalya Romanenko, head of the Department of Trade of Balti Mayoralty, regarding “shop with terrace”:

We emphasize the 340 sq.m. mentioned by Natalya Romanenko, head of the Department of Trade of Balti Mayoralty, which is the absolute truth, since the terrace is added to the shop area. And now we publish “Notification of Trade”, submitted by the owner of this property to the Office of Trade of Balti, which is managed by the same Natalia Romanenko:

340 sq. m of commercial area turned into 300 sq. m of area. Not many itizens will understand why you have to hide the extra meters of the market square.

This is the reply of the Head of the Financial Office Balti Mayoralty Rusu V. A., received before the request for a copy of the Notice. In it, the officials of the mayoralty give the wrong information, saying that the owner has filed a notice of the trade, indicating the commercial area as 340 sq. meters. Having on hands a copy of this Notice, we see that the reply from the Head of the Financial Administration to Russ V. A. contains false information about the taxes paid by the owner of this property. For example, we are given a table for calculating the Rate of Fee for Objects of Trade, which can be used for the chosen type of activity and commercial area. Here’s what the table with rates for traded items for the Code 56.30 look like:

300 sq. m of commercial area is 10,140 lei of taxes. And if the owner indicated 340 sq. meters, which are well known among the officials of mayoralty, he would pay 25,000 lei every year. Is there a difference?

But that’s not all there is to this analysis. In our opinion, what is inside the terrace “Objora” is a fully-fledged restaurant located in the very center of Balti. It is not “a shop with a terrace”. And in the heart of Balti, we believe, is a restaurant whose tax calculation should be according to this table:

We have 300 sq. meters of commercial area, which we consider restaurant area. Therefore, every year for 300 meters restaurant owner could pay to budget not 10 140 lei per year as now, but 50 thousand lei. Consequently, a budget of 38,860 lei of tax and 5,424 lei of rent can be lost from only one such facility each year. For 8 years of existence of the object “raids” the lost amount of 354 272 lei.

Results of examination of documents

  • We believe that the owner of this plot may have deliberately undervalued the commercial space in order to pay less tax. He could also intentionally make a convenient classification of his trade activities. And how many such facilities are there in our municipality as well as in the whole country?
  • As we can see, the chiefs of the Mayoralty Directions are well aware of what the commercial area should be, but in doing so they accept a notice from the owner in which the sales area is understated. Prior to our request for a copy of this Notice, the officials of the Mayoralty claimed that the owner filed a 340 sq. metres of commercial space. Why did the early responses from the mayoraty contain false information?
  • What is a “shop with a terrace”? We see under the “Terrace Objora” – it is a completely autonomous commercial object in which there is no connection with the shop, except general documentation.
  • How many Balti business owners who pay taxes on tens of thousands of lei per year and receive rent at the lowest possible rate?

Authors:
Diana Grosu
Vitali Cozearschi

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