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Moldova

Country Name: Republic of Moldova
Currency: Moldovan Leu (MDL)
Primary Tax Authority: State Tax Service (Serviciul Fiscal de Stat)
Key Legislation:

  • Tax Code of Moldova (Codul Fiscal)
  • Law on Value Added Tax (VAT)
  • Law on Corporate Income Tax (CIT)

Fiscal Authority Allocation

Centralized Fiscal System:
Moldova operates under a centralized fiscal system. The State Tax Service is responsible for the collection of taxes, including corporate income tax, personal income tax, VAT, and other national taxes. Local authorities have limited tax powers, primarily collecting property taxes.

Corporate Income Tax (CIT)

Standard Rate: 12%
Moldova levies a corporate income tax of 12% on the worldwide income of resident companies. Non-resident companies are taxed only on Moldova-sourced income.

Corporate Forms and Taxation:

  1. Limited Liability Company (Societate cu Răspundere Limitată – SRL): The most common corporate form in Moldova, subject to the 12% CIT rate.
  2. Joint-Stock Company (Societate pe Acțiuni – SA): Typically used by larger businesses, also taxed at the 12% CIT rate.
  3. Branches of Foreign Companies: Taxed on Moldova-sourced income at the same 12% rate.

Exemptions and Incentives:

  • Free Economic Zones (FEZs): Companies operating in FEZs benefit from a reduced CIT rate of 6% for up to 10 years, depending on the nature of the investment.
  • Investment Incentives: Investments in infrastructure, agriculture, and technology may qualify for tax holidays and CIT reductions.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 20%
Moldova applies a VAT rate of 20% to most goods and services. A reduced rate of 8% applies to basic foodstuffs, pharmaceuticals, and certain utilities.

Exemptions:
Financial services, education, and healthcare services are generally exempt from VAT. Exports are zero-rated, allowing businesses to reclaim VAT on inputs.

Personal Income Tax (PIT)

Progressive Rates:
Moldova has a progressive personal income tax system with two brackets:

  • Income up to MDL 360,000: 12%
  • Income above MDL 360,000: 18%

Dividends:
Dividends are taxed at a flat rate of 6%.

Additional Mandatory Contributions

Social Security Contributions:
Both employers and employees must contribute to the Moldovan social security system, which covers pensions, healthcare, and unemployment benefits.

  • Employer Contribution: 24% of gross salary.
  • Employee Contribution: 6% of gross salary.

Withholding Taxes

  • Dividends: 6%
  • Interest: 12%
  • Royalties: 12%
    Withholding taxes may be reduced under Moldova’s double taxation agreements (DTAs).

Transfer Pricing Rules

Moldova follows OECD guidelines for transfer pricing. Related-party transactions must comply with the arm’s-length principle, and companies must maintain documentation for cross-border transactions exceeding specific thresholds.

Special Tax Regimes

  • Free Economic Zones (FEZs): Companies operating in Moldova’s FEZs benefit from CIT reductions, customs duty exemptions, and VAT exemptions on imported goods and services used in production.
  • Agriculture Sector: Tax incentives are available for agricultural enterprises, including reduced tax rates and deductions for investments in land and machinery.

Other Taxes

  • Real Estate Tax: Levied on property ownership, with rates determined by local governments based on the cadastral value of the property.
  • Capital Gains Tax: Capital gains are taxed as ordinary income, subject to the PIT rates of 12% and 18%.
  • Excise Duties: Moldova imposes excise duties on goods such as alcohol, tobacco, and fuel.

Double Taxation Agreements (DTAs)

Moldova has signed over 50 double taxation agreements with various countries, including key trading partners such as Romania, Russia, and Germany. These treaties reduce withholding taxes on dividends, interest, and royalties and prevent double taxation of income.

Local Taxes

Local governments in Moldova are responsible for collecting property taxes, as well as certain municipal fees. However, income taxes and VAT are managed centrally by the State Tax Service.

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by March 25th of the following year. Personal income tax returns are due by April 30th. The tax year follows the calendar year.

Penalties for Late Filing:
Penalties for non-compliance or late filing include interest on unpaid taxes and fixed fines. The penalty rate is 0.06% per day on overdue amounts.

Recent Developments

Digital Services Tax:
Moldova is considering introducing a digital services tax aimed at taxing multinational companies that provide digital services to Moldovan consumers, in line with international trends.

Green Tax Incentives:
The Moldovan government has introduced tax incentives for companies investing in renewable energy, energy-efficient infrastructure, and sustainable agriculture. These include tax credits and accelerated depreciation for green investments.

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