Approval of tax and customs legislation amendments

In brief

Various laws and government decisions significantly amending the tax, customs and other normative acts have been published.

In detail

Income tax

Individuals’ taxation

The annual allowances for 2023 have been maintained at the same level as the previous year.

Individuals who received salary income from a company resident of the information technology park during a tax period are not allowed to use the annual allowance for the full period. The allowances will be applied in proportion to the number of months of activity in accordance with the general tax regime.

Final withholding income tax

The rate of withholding income tax, applied to interest paid to resident individuals, has been increased from 3% to 7%.

Furthermore, the withholding income tax rate of 12% has been established for income obtained by individuals in the form of interest and/or capital gains from state securities.

Special rules regarding income

For tax purposes, for taxpayers carrying out entrepreneurial activity generating income from economic transactions with shareholders or other related parties performed at a price lower than market value, the income will be adjusted accordingly.

Deductible expenses

Expenses incurred and determined by an employer for any payments made for the benefit of employees for which the payroll taxes were calculated/withheld are deductible without having to prove them to be ordinary and necessary.

Evidence and calculation of fixed assets amortisation for tax purposes

As of 1 January 2023, the recognition threshold for the fixed assets for which the amortisation is calculated for tax purposes is MDL 12,000.

In addition, for entities that apply International Financial Reporting Standards (IFRS), the lessee calculates and deducts the amortisation related to the right of use of fixed assets subject to an operational leasing contract.

Large companies (except companies engaged in financial and insurance activities) can use the accelerated amortisation method for the first year in which the fixed asset is put into use.

Capital gains and losses

Capital gains and losses will not be recognized in the case of the disposal of a car owned by the taxpayer for at least three years prior to the disposal date, except for collector cars of historical or ethnographic interest.

The capital gains or losses resulting from the sale, exchange, or other forms of alienation of a home in joint property acquired by spouses during their marriage can only be determined by one of the co-owners based on a joint written agreement.

Non-resident taxation rules

The types of income subject to withholding tax at the source of payment regardless of the effective place of service provision have been revised for non-residents without a permanent establishment carrying out entrepreneurial activity in the Republic of Moldova.

Further, in the case of non-residents carrying out an activity in the Republic of Moldova through a permanent establishment, when determining the income attributed to it, the documented expenses related to this income are allowed for deduction.

According to the tax legislation for 2023, tax residence certificates are valid for the year(s) for which it was issued, unless the conditions of residence change.

The terms, manner, form and place of corporate income tax payment

Enterprises classified as micro, small or medium, according to the criteria determined on the last day of the tax period according to the provisions of Law no. 179/2016, can pay the calculated corporate income tax until the twenty-fifth day of the month following that in which dividends were paid, including in the form of stocks or shares, from the profit obtained in the tax periods 2023-2025 inclusive. The amount of corporate income tax to be paid is determined by applying the pro rata between the amount of corporate income tax calculated for the tax period and the taxable income for the respective tax period.

Value added tax (VAT)

The reverse charge mechanism for VAT on import of services has been implemented, so VAT payers are not required to pay VAT on such imports. The VAT amounts related to these transactions will be reflected as output VAT, and input VAT will be allowed for deduction. Non-VAT payers will be required to pay and declare VAT on the import of services.  

Companies registered as VAT payers that register the transactions via Automated Informational System (AIS) and/or issue tax receipts via cash machines with Electronic Sales Monitoring (ESM) have the right to refund VAT on purchased goods and services. The refund will be made for the excess amount of VAT on purchases (including VAT on imports) over the amount of VAT on supplies for transactions registered as of 1 January 2023.

For cases where the monthly ratio determined between the exempted supplies without deduction right and total supplies is lower than 0.05, the VAT amount paid or to be paid related to mixed procurements is fully allowed for deduction. VAT amounts previously reflected as costs or expenses in the previous tax periods for mixed procurements are deducted in the last tax period if the annual pro rata is lower than 0.05.

Special cases of issuing tax invoices

In the case of recharge of expenses compensated in favour of individuals, a tax invoice is not mandatory unless at the individual’s request.

When using the electronic tax invoice “e-Invoice” system for supplies of goods documented by the accompanying notices, the supplier issues the e-Invoice no later than the tenth day of the month following that in which the supply was documented by those notices.

Excise duties

The excise duty rates on ethyl alcohol and tobacco products have been increased.

A method of calculating the reference price for cigarettes and cigars will apply as of 1 April 2023, along with a ban on selling them at a price lower than the reference price.

Tax on real estate and land

The maximum and specific tax rate for determining the real estate tax and land tax have been abolished.

The specific tax rates for real estate / land tax are determined annually by the representative and deliberative authorities of the local government.

For legal entities and individuals registered as entrepreneurs, 25 September is the deadline for submitting the calculation and payment of the tax on real estate acquired before 31 August. For real estate acquired after that date, the deadline is 25 March of the tax period following the reporting one.

 Taxes on natural resources

As of 1 January 2023, natural resources taxpayers have to submit the tax return and pay the taxes by the twenty-fifth of the month following the end of the reporting quarter as follows:

• Water tax - paid to the local public administration authorities of the second level;
• Tax for extraction of useful minerals - 50% of the tax amount is paid to the first-level local budget and 50% to the second level of the local budget;
• Tax for the use of the subsoil - paid to the local public administration authorities of the second level.

Tax administration

The manner of submission the tax reports

As of 1 January 2023, all taxpayers, except individuals who do not carry out entrepreneurial activity, should submit reports using the automated electronic reporting method.

The general anti-abuse rule

For determining the taxpayer’s tax liability, as of 1 January 2024, the State Tax Service will have the right to disregard or reclassify a transaction/action which, with regard to all the relevant facts and circumstances, reflects a situation or economic content other than that claimed by the taxpayer and is assumed to obtain a tax advantage.

The anti-abuse rule is used by the State Tax Service in the framework of tax inspections. The procedure for applying this rule will be established by the Ministry of Finance. The anti-abuse rule also applies to a transaction/action or a series of transactions/actions that meet certain conditions.

Special rules on transfer pricing

As of 1 January 2024, the transfer pricing concept and regulations will enter into force. Under the new provisions, the taxpayer should reflect the market price of goods and services traded in controlled transactions with related parties according to the arm’s length principle, according to which prices used in transactions with related parties should be equal to those that would have been charged between third parties in similar economic circumstances.

Transfer pricing rules apply to local and cross-border transactions between related parties.      

The Customs Code

The new customs code will enter into force as of the 1 July 2023.    

Compulsory state social security contributions

Employer social security contributions (SSC) remain at 24%. SSC rates applicable to employers in all fields also remain unchanged.

The annual fixed amount of the SSC has been increased from MDL 12,838 to MDL 14,700.

Compulsory health insurance contributions

Health insurance contributions (HIC) remain at 9% of the labour remuneration fund and other forms of remuneration.

The fixed annual HIC has been increased from MDL 4,056 to MDL 12,636.

Individuals included at the start of the reporting year in the category of payers insured individually who are employed during the year and confirm the payment of the fixed HIC for that respective year will continue to pay the HIC based on a percentage. They will be able to request a refund of the fixed HIC paid based on the proportion of days in the reporting year when they were included in the category of employees.

Some categories of individuals who are simultaneously included in the category of unemployed persons insured by the government and hold elective positions or work in trade unions or employers’ organisations will not pay the fixed HIC.

The law on meal tickets

The maximum threshold deductible for tax purposes of a meal ticket has been increased from MDL 55 to MDL 70 per working day.

The national average monthly salary forecast for 2023

For 2023, the national average monthly salary forecast has been increased from MDL 9,900 to MDL 11,700.

The national minimum wage for 2023

The national minimum wage has been set at MDL 4,000 a month, as of 1 January 2023, for a full work schedule of 169 hours.

The takeaway

Legal provisions amending some fiscal, customs legislation and other normative acts entered into force on 1 January 2023, with some exceptions.