By its nature, the fiscal system of the Republic of Moldova is progressive. There are two types of taxes and duties levied in this country according to the institutions in charge with their collection and management: general state (central) taxes and duties, and local taxes and duties.
These are the main central payments:
- income tax is 12% for legal entities and 12% for individuals; however in the case of legal entities this tax may be lower if we consider a farmer - 7%, a resident of the Free Economic Zone - 6%, or a resident of the Giurgiulești International Port - 3%;
- value-added tax is different: the standard rate is 20%, but for HORECA it is 15%, for pharmaceuticals and agrifood it is 8%, for natural gases 6%, and for international transportation 0%;
- excises vary between 0.5% and 5%, depending on the tariff position of a given product;
- customs duty may be as high as 30%, although there are plenty of exemptions and preferences;
- road duty, which depends on the engine’s capacity or the vehicle’s weight;
- wealth tax, which includes the land and real estate payments - up to 50% of profit;
- dividends amount to 6%.
Other important payments are:
- social security contributions: 18% for legal entities and 6% for individuals, and
- health insurance - 4.5% for legal entities and 4.5% for individuals.
By features and form there are direct and indirect taxes and duties.
The State Fiscal Service and the Customs Service are the institutions responsible for the collection of taxes and duties, both are subordinated to the Ministry of Finance of the Republic of Moldova.
Foreign investments are important for Moldova’s economy and attraction of FDIs is treated with priority in the decision-making process.
The Republic of Moldova has enforced a friendly and stimulating fiscal system for resident companies, which provides for fiscal and customs incentives in the case of foreign investors. Also, aside from the generally-valid regulations for all businesses, in special zones such as industrial parks or free economic zones there are preferential conditions for trade and production, which offer even more opportunities for business.
Moldova is also a signatory of double tax avoidance agreements with most of the European Union member states and ex-Soviet countries, as well as some countries in Asia and America. (cite tari in total?)
Depending on needs and circumstances, the authorities take additional measures to support domestic companies in various industries, demonstrating flexibility and responsiveness to taxpayers’ wishes. Duty exemptions for farmers who bear losses in connection with climate conditions or incentives for investors engaging in industrial production in a Free Economic Zone or Industrial Park may serve as examples in this regard. More recently, the Moldovan Government has introduced a number of tax exceptions for businesses in order to compensate their losses over the COVID-19 pandemic.
On the other hand, tax exemptions are common in the case of international projects or activities based on bilateral agreement between Moldova and the state that is the source of investment; as a result companies that move their operations to Moldova and create new jobs get even better conditions. The same is valid for public-private partnerships, national projects such as road building and strategic industries such as automotive or wine-making.
A large number of tariff positions are advantaged in the case of imports (raw materials, for example) and exports (final products).
In some cases investors have the option of direct negotiations with the authorities.
The Republic of Moldova provides for a range of tax and administrative incentives to investors. General incentives include taxable income deductions for transportation (25 lei per employee), food catering (35 lei per employee), and personnel training. Employers may also offer meal vouchers, which let them save between 1.8 and 2.3 euros a day.
Specific incentives have been enforced depending on the industry investors choose to work.