Moldova Tax Rates
Personal income tax rates in Moldova are progressive to 18%.
Income tax rates of individuals will not be changed until 2013.
Income (MDL) Tax Rate
0 - 25,200 7%
Over 25,200 18%
Personal Annual Tax Exemptions 2010-2013
Personal annual exemption will be increased respectively from 8,100 MDL in 2010 to 9,000 MDL in 2011 and respectively 15,000 MDL from 2012. This amount will be updated annually in line with the developments of subsistence minimum in the reference period, for 2009 amounting to 1,250 MDL/ per month.
Annual exemption for dependents is also proposed to be increased from 1,800 MDL in 2010 to 2,220 MDL in 2011 and 25 percent of the subsistence minimum in 2012-2013.
Individuals in Moldova are subject to personal income tax, social security taxes and immovable property tax. The tax year for individuals is the calendar year and a tax return must be filed by 31 March of the following year.
Residency
Individuals with a place of residence in Moldova are subject to Moldovan personal income tax on their worldwide income. Nonresidents pay tax only on income sourced in Moldova. For tax purposes a resident is defined as:
- A person who has a permanent place of residence in Moldova, including persons staying abroad for treatment, vacation, study, business travel or an official mission; and
- An individual who stays in Moldova for 183 days or more during a fiscal year.
Determination of taxable income
An employee's gross income includes basic pay, overtime pay, all kinds of additional pay, awards and bonuses, compensation for unused holiday or vacation time, and all other monetary or in kind benefits, as well as other services granted for free. Income of individuals is recognised on a cash, not accrual, basis.
In determining taxable income, an individual may deduct obligatory contributions to pensions and to the Medical Fund. Donations to recognised charities and certain nonprofit organisations (e.g. educational and cultural institutions, associations of disabled people and war veterans) may be deducted up to a maximum of 10% of the taxable income.
Tax-exempt sources of income include compensation under insurance contracts, compensation paid for work injury or disability, severance pay, alimony or child support payments, nominative compensation to socially vulnerable populations, donated or inherited property, benefits received from charitable organisations and some other income.
Special expatriate tax regime
Income received by a foreigner (nonresident) is taxable in Moldova only if it is obtained from sources within the country. Expenses, losses and other payments directly attributable to this income are not deductible. The salary of an expatriate working in Moldova is subject to income tax at the same rates as those for Moldovan residents. Nonresident private individuals are not allowed to claim personal income tax exemptions, nor exemptions for spouses or dependents.
Salaries of foreign personnel employed by some international organisations or diplomatic offices are tax-exempt if such treatment is envisaged by the relevant inter-governmental agreement.
Capital taxes
Capital gains of individuals are treated as income, but a deduction is granted on the disposal of private immovable property that was the taxpayer's residence for at least three years before the disposal. The deduction amounts to MDL 10,000 for each year of ownership.
Social insurance
Contributions to the social insurance system entitle employees to a pension upon retirement, paid sick leave and maternity leave, childcare benefits, professional injury and unemployment benefits and other social payments.
Moldovan employers and employees are required to contribute to the social security system. The employer's contributions as a percentage of the employee's gross salary are 23% for social security and 3.5% for medical insurance. Employee pension fund contributions as a percentage of gross salary and benefits are 6%, with the annual basis for calculation capped at five average forecasted salaries multiplied by twelve months (the average forecasted salary for 2009 is MDL 3,140 per month). Employee medical insurance contributions as a percentage of gross salary are 3.5%. Employee contributions are deductible for income tax purposes. Employees' contributions are to be calculated, withheld and paid to the State Budget by the employer on a monthly basis. Employers must submit quarterly tax returns on social security contributions by the 15th of the following month and on medical security contributions by the last day of the next month, respectively.
Social security contributions are not payable for or by expatriates unless they are willing to benefit from the Moldovan social security system.
Capital duty - No
Stamp duty - Rates range from 0.2%-0.5% on various transactions.
Capital acquisitions tax - A 10% tax is levied on the rent of real estate, movable property and lottery winnings.
Real property tax - Residents and nonresidents that own immovable property in Moldova must pay real property tax at rates set annually by the local public administration authority. The rate may not be less than 50% of the maximum rate stipulated by statute.
Inheritance/estate tax - No
Net wealth/net worth tax - No
Moldova Corporate Tax
As of 1 January 2008 the corporate tax rate in Moldova is 0%.
The 0% corporate income tax rate in Moldova is expected to be in force until 2012. A 10% corporate income tax rate is expected after 2012.
In Moldova, both earned and distributed profits of corporations are exempt from corporate taxation. Dividends paid to the shareholders are subject to a withholding tax at a rate of 15%. Thus, the corporations are tax exempt, but distributed profits are subject to tax at the level of shareholders, therefore the rate of 0% should not be considered as an absolute exemption from the income tax. Most notable is the fact that under the double tax treaties Moldova is often restricted to withhold tax on dividends paid to non-resident shareholders. The result may be the complete tax exemption in Moldova.
The main taxes applicable in Moldova include the corporate income tax, withholding tax, Value Added Tax, customs duties, excise tax, local taxes, and social and medical insurance contributions. Except for the social and medical insurance contributions and customs duties, all of the above taxes and charges are covered by the 1997 Fiscal Code. This Fiscal Code is designed to bring more stability to the Moldovan tax regime, and any significant amendments should be published before they are effective (usually starting the first day of following year), although this rule is not strictly observed.
Moldovan companies are liable to pay corporate income tax on their worldwide income. Permanent establishments are treated as resident economic agents for tax purposes and are subject to corporate income tax only on their income obtained in Moldova.
Although the corporate income tax rate is 0% (as from 1 January 2008), taxpayers should file an annual corporate income tax return and calculate taxable income for the year.
Taxable income defined
Corporate income tax is levied on the worldwide income and capital gains of resident taxpayers and is assessed on the basis of the company's annual taxable income minus deductible expenses. Capital gains are generally not treated separately and are subject to the standard rate of income tax. Dividends received by a Moldovan resident company from another Moldovan company should be included in total taxable income even though such dividends are exempt from withholding tax.
Tax Deductions
As a general rule, companies may deduct all ordinary and necessary expenses paid or incurred during a tax year, provided they are related to the business activity and are supported by documentation. Expenses incurred for personal and family purposes are not deductible. If the expenses include both personal and business expenses, a company is allowed to deduct only the business share of expenses and only if this exceeds the share of personal expenses. Some expenses (i.e. insurance, protocol, sponsorship and business trip expenses) may be deducted within certain limits established by the government. Bad debts expenses are deductible under certain conditions established by the Moldovan Fiscal Code.
Expenses that are not supported by justifying documents are deductible in an amount equal to 0.1% of total taxable income. Expenses for the repair of leased fixed assets are deductible up to 15% of the amount of rentals accrued in the tax year. The same 15% limit applies to the deduction of expenses from repairs of "own" (as opposed to leased) fixed assets or fixed assets under a finance lease. The amount of the deduction should be calculated from the tax value basis of the respective category of property at the beginning of the year.
Non-deductible expenses
The following expenses are not deductible: amounts paid for the acquisition of land, depreciable property and fixed assets with a useful life exceeding one year; expenses incurred in relation to activities that generate non-taxable income; amounts paid to the holder of a business patent; penalties and fines paid for violation of the law; taxes paid on behalf of a person, other than the taxpayer; waste, spoilage and normal losses in excess of the annual norms approved by the company's director; and allocations to reserves, except for allocations to the Loan Loss Provisions (risk fund) of financial institutions. The deductions allowed for financial institutions in this regard should be within the limits set by the National Bank, etc.
Depreciation
The most common method of depreciation for intangible assets is the straight-line method. Under this method, depreciation write-offs are made on the initial value of intangible assets calculated according to their purchase price or cost of development and useful life.
All tangible assets valued at more than MDL 3,000 and having a useful life more than a year should be grouped into five categories for the tax depreciation purposes. The fixed assets grouping is performed according to the recommended useful lives provided in the Catalogue of Fixed Assets and Intangibles. The diminishing balance method should be used to calculate tax depreciation.
Losses - Losses may be carried forward for five consecutive years and set off against taxable profits in equal parts.
Capital Gains - Capital gains and losses on sales, exchanges or other transfers of capital assets are equal to the difference between amounts received and the cost bases of the assets. The amount of capital gains subject to income tax in a fiscal year is equal to 50% of the excess amount of any capital gain reduced with any capital losses. Net capital losses may be carried forward to offset capital gains in the following five years. Starting 1 January 2008 the Corporate Income Tax rate on capital gains is 0%.
Moldova Tax Year - Moldova tax year is the calendar year. A company may not elect a different tax year.
Payment of Tax - The corporate income tax return must be filed by 31 March of the year following the tax year. An amended tax return can be filed to correct errors contained in the original tax return. If the errors caused insufficient taxable income to be reported in the original return, the company must specify appropriate penalties and fines in the amended return. If the errors caused too much taxable income to be reported in the original return, the company must indicate in the amended return the extra tax paid. Under the Moldovan Tax Code, companies may either obtain a refund of an overpayment of tax or offset the overpayment against existing or future tax liabilities. All taxes in Moldova must be paid in Moldovan lei (MDL). To calculate the tax on income realized in foreign currency, the income must be converted into lei using the official exchange rate on the payment date.
Withholding tax
Dividends - Dividends paid to domestic companies are not taxable at source, but they still are included in the recipient company's gross income. Dividends paid to resident individuals or nonresident companies/individuals are subject to a final withholding tax at 15%. A lower rate may be applied if dividends are distributed to a company resident in a country that has concluded a tax treaty with Moldova and the foreign recipient can corroborate its domicile by presenting a certificate of residence issued by an authorised state authority of its country.
Interest - Interest paid to nonresidents is subject to a 10% withholding tax, which may be reduced or eliminated under an applicable tax treaty.
Royalties - A 10% withholding tax is imposed on royalties paid to nonresidents. The 10% rate may be reduced or eliminated under an applicable tax treaty. To obtain a lower treaty rate, the recipient must present a certificate of residence issued by the authorised state body in the recipient's country of residence.
Other income - According to the Fiscal Code, other types of income derived by a nonresident from sources in Moldova are subject to a 10% withholding tax (or 15% if this represents a nondeductible expense for a local entity incurring the cost). If a tax treaty rate applies, the recipient must present proof of residence (i.e. certificate of residence).
Transfer pricing - There is no specific transfer pricing legislation in Moldova. However, there is a general provision of the Fiscal Code that transactions between related parties should be carried out at "arm's length." The tax authorities may examine transactions between related parties to determine whether the market value has been observed and whether the relationship of the
parties has influenced the financial result.
Thin capitalisation - Thin capitalisation as such was eliminated starting 1 January 2008, but new rules were introduced on interest deductions. The deduction of interest paid or calculated by a legal entity (except for financial institutions) to individuals or other legal entities on borrowings is allowed only within the limits of the National Bank's prime interest rate (refinancing rate) set for November of the year before the current financial year (16% for 2009).
With respect to the deductibility of exchange differences arising from foreign currency borrowings, all assets and liabilities (including borrowings) in foreign currency should be revalued at the end of each reporting period and the resulting foreign exchange differences included in the financial results. Under certain extraordinary circumstances (e.g. hyperinflation), foreign exchange differences may be recognised as an adjustment to the carrying value of the assets, rather than recorded as income or expense.
Controlled Foreign Corporations (CFC) - Moldova does not have CFC legislation.
Group taxation - No provision is made for group taxation or group treatment; all entities are taxed separately.
Social security contributions - Moldovan employers and employees are required to contribute to the social security system. The employer's contributions as a percentage of the employee's gross salary are 23% for social security and 3.5% for medical insurance. Employee pension fund contributions as a percentage of gross salary and benefits are 6%, with the annual basis for calculation capped at five average forecasted salaries multiplied by twelve months (the average forecasted salary for 2009 is MDL 3,140 per month). Employee medical insurance contributions as a percentage of gross salary are 3.5%. Employee contributions are deductible for income tax purposes.
Employees' contributions are to be calculated, withheld and paid to the State Budget by the employer on a monthly basis. Employers must submit quarterly tax returns on social security contributions by the 15th of the following month and on medical security contributions by the last day of the next month, respectively. Social security contributions are not payable for or by expatriates unless they are willing to benefit from the Moldovan social security system.
Tax compliance and administration - The tax year is a calendar year. For tax periods starting from 1 January 2008, the rate of the corporate income tax has been set at 0%. However, the legal requirements to file an annual corporate income tax return, which is due by 31 March of the following fiscal year, remain in force. Understatements of taxable income, calculated within the corporate income tax return, are subject to a 25% penalty.
Foreign Tax Relief - Companies may claim a credit against corporate income tax for foreign tax paid on income that is subject to tax in Moldova. The foreign tax credit is granted for the year in which the relevant income is subject to tax in Moldova.
Tax Incentives in Moldova
Companies with Significant Investments in Their Share Capital or Significant Amounts of Capital Expenditure. On entering into a corporate income tax agreement with the tax authorities, companies that have significant investments in their share capital or make significant amounts of capital expenditure may benefit from one of the tax exemptions described below. Although from 2008 these corporate tax exemptions have been replaced by the blanket zero tax rate, they will become relevant when the zero tax rate will be replaced by a higher tax rate.
A 50% reduction of the standard corporate income tax rate may be granted for a five-year period if all of the following requirements are met:
- The investment in the company's share capital or the company's capital expenditure exceeds US$250,000;
- The company uses at least 80% of the amount of the tax reduction for the development of its own production or services, or for the development of sectors of the Moldovan economy;
- The company does not have any liabilities to the budget; and
- The company has not previously benefited from similar corporate income tax exemptions.
A three-year exemption from corporate income tax may be granted if all of the following requirements are met:
- The investment in the company's share capital or the company's capital expenditure exceeds US$2,000,000;
- The company uses 80% of the exempt income for the development of its own production or services, or for development of sectors of the Moldovan economy;
- The company does not have any liabilities to the budget; and
- The company has not previously benefited from similar corporate income tax exemptions.
A three-year exemption from corporate income tax may be granted if all of the following requirements are met:
- The investment in the company's share capital or the company's capital expenditure exceeds US$5,000,000;
- The company uses 50% of the exempt income for the development of its own production or services, or for development of sectors of the Moldovan economy;
- The company does not have any liabilities to the budget; and
- The company has not previously benefited from similar corporate income tax exemptions.
A three-year exemption from corporate income tax may be granted if all of the following requirements are met:
- The investment in the company's share capital or the company's capital expenditure exceeds US$10,000,000;
- The company uses 25% of the exempt income for the development of its own production or services, or for development of sectors of the Moldovan economy;
- The company does not have any liabilities to the budget; and
- The company has not previously benefited from similar corporate income tax exemptions.
A four-year exemption from corporate income tax may be granted if all of the following requirements are met:
- The investment in the company's share capital or the company's capital expenditure exceeds US$20,000,000;
- The company uses 10% of the exempt income for the development of its own production or services, or for development of sectors of the Moldovan economy;
- The company does not have any liabilities to the budget; and
- The company has not previously benefited from similar corporate income tax exemptions.
A four-year exemption from corporate income tax may be granted if all of the following requirements are met:
- The investment in the company's share capital or capital expenditure exceeds US$50,000,000;
- The company does not have any liabilities to the budget; and
- The company has not previously benefited from similar corporate income tax exemptions.
On the expiration of the tax exemption period, companies qualifying for one of the tax exemptions listed above may apply for an additional corporate income tax exemption of three years if the investment in the company's share capital or the company's capital expenditures made during this additional exemption period exceeds US$10,000,000. This additional incentive is not available to companies qualifying for the 50% tax reduction described above.
Software Companies. Companies that principally engage in software development qualify for a five-year exemption from corporate income tax if the following requirements are met:
- The income from software development exceeds 50% of the company income from sales;
- The company does not have any liabilities to the budget and during the period of corporate income tax exemptions, any delay in the payment of liabilities to the budget does not exceed 30 calendar days; and
- The company has not previously benefited from corporate income tax exemptions.
Free-Trade Zones. Residents of free-trade zones benefit from the following incentives:
- A 50% reduction of the standard corporate profits tax rate on income derived from the exportation outside Moldova of goods originating in the free-trade zone;
- A 75% reduction of the standard corporate profits tax rate on income other than that indicated in the preceding bullet;
- A three-year exemption from corporate profits tax on income derived from the exportation of goods originating in a free-trade zone, beginning with the quarter following the quarter in which investments made in fixed assets or to develop the region reach US$1 million; and
- A five-year exemption from corporate profits tax on income derived from the exportation of goods originating in a free-trade zone, beginning with the quarter following the quarter in which investments made in fixed assets or to develop the region reach US$5 million.
Small and Medium-Sized Enterprises. In general, small and medium-sized enterprises (SMEs) are exempt from corporate income tax for a period of three years. However, this exemption does not apply to the following SMEs:
- SMEs with a dominant position in the market;
- SMEs in which 35% of the share capital is held by non-SMEs, excluding nonprofit organizations;
- SMEs importing or producing goods subject to excise taxes;
- Trust or insurance companies;
- Banks, micro-financing organizations, savings-borrowings associations and other financial institutions;
- Investment funds;
- Pawn shops and currency-exchange companies;
- Gambling companies; and
- Agricultural companies that benefit from other specific corporate profits tax exemptions.
On the expiration of the three-year exemption period, SMEs may apply for a reduction with 35% of the existing corporate income tax rate for a period of two years.
Commercial Banks. Commercial banks providing loans that finance capital investments in specified activities (see next paragraph) benefit from the following incentives:
- Exemption from corporate income tax on income earned from loans granted for more than three years; and
- A 50% reduction of corporate income tax on income earned from loans granted for a period of two to three years.
The corporate income tax incentives mentioned in the preceding paragraph are granted to commercial banks financing capital investments in the following activities:
- Acquisition of fixed assets for use in a business activity, contractor's works and engineering services;
- Acquisition and processing of agricultural products;
- Designing, development, mastering and implementation of new techniques and technologies;
- Restructuring of production process technologies;
- Planting and renewal of perennial plantations; and
- Alcoholic aging of cognacs, raw material wine used to produce classic wines saturated with carbon dioxide and high-quality wines.
Moldova Vat (value added tax)
The standard rate of VAT in Moldova is 20%, and reduced rates, exemptions and zero rates may apply.
All transactions related to the supply of goods and provision of services in the territory of Moldova, as well as the importation of goods and services, are generally subject to VAT.
There are two types of registration for VAT payers: mandatory and voluntary. Registration is mandatory for an entity if the value of its taxable supplies within any 12-month consecutive period exceeds MDL 300,000. An entity may register as a VAT payer voluntarily if it has made taxable supplies of goods or services, the total value of which within any 12-month consecutive period exceeds MDL 100,000 and the supplies have been paid by wire transfer into the entity's bank account. Voluntary registration also is available for companies making capital investments, except for investments in residential construction and transport facilities. This provision does not extend to the companies operating in the Chisinau and Balti municipalities. The tax authorities have the power to cancel VAT registration if the taxable supplies of a company during any 12-month period are below MDL 100,000.
A reduced rate of 5% is applied to natural and liquefied gas, either imported or supplied from in the territory of Moldova. A reduced rate of 8% is levied on certain bakery and dairy products, as well as milk (baby food is exempt). The 8% rate also applies to the import or supply in Moldova of drugs, including those prepared in drugstores.
VAT returns must be filed on a monthly basis. The due date for the VAT return and VAT payment is the last day of the month following the reporting month. VAT in respect of the import of services is due on the day payment for the services is made.
18%
0%
20%
Moldova
Income Tax Rate
Moldova
Corporate Tax Rate
Moldova
Sales Tax / VAT Rate
Last Update: Nov 2010
(This page may show previous year's tax rates. Always check last update time)
ALBANIAALGERIAANDORRAANGOLAANGUILLAANTIGUA & BARBUDAARGENTINAARUBAAUSTRALIAAUSTRIAAZERBAIJANBAHAMASBAHRAINBANGLADESHBARBADOSBELARUSBELGIUMBELIZEBENINBERMUDABOSNIA & HERZEGOVINABOTSWANABRAZILBRITISH VIRGIN ISLANDSBRUNEIBULGARIABURKINA FASOBURMABURUNDICAMBODIACAMEROONCANADACAPE VERDECAYMAN ISLANDSCENTRAL AFRICAN REP.CHADCHILECHINACOLOMBIACOMOROSCONGO, DEM. REPUBLICCONGO, REPUBLIC OFCOOK ISLANDSCOSTA RICACOTE D'IVOIRECROATIACUBACURAÇAOCYPRUSCZECH REPUBLICDENMARKDJIBOUTIDOMINICADOMINICAN REPUBLICECUADOREGYPTEL SALVADOREQUATORIAL GUINEAESTONIAFIJIFINLANDFRANCEFRENCH POLYNESIAGAMBIAGEORGIAGERMANYGHANAGIBRALTARGREECEGRENADAGUATEMALAGUERNSEYGUYANAHONDURASHONG KONGHUNGARYICELANDINDIAINDONESIAIRANIRELANDISLE OF MANISRAELITALYIVORY COASTJAMAICAJAPANJERSEYJORDANKAZAKHSTANKENYAKUWAITLATVIALEBANONLIBYALITHUANIALUXEMBOURGMACAUMADAGASCARMADEIRAMALAWIMALAYSIAMALDIVESMALTAMAURITIUSMEXICOMOLDOVAMONACOMONTENEGROMOROCCOMOZAMBIQUEMYANMARNAMIBIANEPALNETHERLANDSNETHERLANDS ANTILLESNEW ZEALANDNICARAGUANIGERIANORWAYOMANPAKISTANPALESTINEPANAMAPAPUA NEW GUINEAPARAGUAYPERUPHILIPPINESPOLANDPORTUGALPUERTO RICOQATARROMANIARUSSIARWANDASAUDI ARABIASENEGALSERBIASIERRA LEONESINGAPORESLOVAKIASLOVENIASOUTH AFRICASOUTH KOREASPAINSRI LANKASWAZILANDSWEDENSWITZERLANDSYRIATAIWANTANZANIATHAILANDTUNISIATURKEYTURKS AND CAICOSUGANDAUKRAINEUNITED ARAB EMIRATESUNITED KINGDOMUNITED STATESURUGUAYUZBEKISTANVANUATUVENEZUELAVIETNAMWEST BANKYEMENZAMBIAZIMBABWE
© 2009-2012 TaxRates.cc
2011 - 2012 Tax Rate Guide and Tax Help Website
