(f) The 6% rate applies to a list of agricultural products. The 12% rate applies to other types of goods acquired from resident individuals (with certain exceptions).
(g) This withholding tax applies to insurance premiums paid to nonresidents.
(h) The 18% rate applies to winnings from gambling. A 12% rate applies to winnings from advertising campaigns paid to nonresidents. The amount that exceeds MDL27,000 of winnings from advertising campaigns paid to residents is also subject to a 12% withholding tax. A 0% rate applies to the amount of winnings from lotteries paid to residents up to MDL270 per winning.
(i) The 6% withholding tax applies on donations made in cash to resident individuals.
B. Taxes on corporate income and gains
Corporate income tax. Resident companies are subject to tax on their worldwide income. Resident companies are companies with activities managed or organized in Moldova (an activity is organized in Moldova if it is carried out by a company that is registered in Moldova as a legal entity) and companies that carry out their business activities primarily in Moldova.
Permanent establishments of nonresident companies in Moldova are subject to tax on their income from Moldovan sources. For tax purposes, permanent establishments are considered to be resident entities.
Rates of corporate income tax. The rates of corporate income tax in Moldova are described below.
Standard corporate income tax rate. The standard corporate income tax rate in Moldova is 12%.
Small and medium-sized companies (except for farmers and individual entrepreneurs) that are not registered as value-added taxpayers. The following are the tax rates applicable to small and medium-sized companies (except for farmers and individual entrepreneurs):
• If the company is not registered as a value-added tax (VAT) payer, it can choose to be taxed at a 4% tax rate applied to the income established according to the statutory books in the current reporting period or at the standard corporate income tax rate of 12% in the following cases:
In the previous fiscal reporting period (ending 31 December), the company obtained income from VATexempt supplies or income both exempt from VAT and taxable in an amount up to MDL1,200,000, provided that the supplies exempt from VAT exceeded 50% of the taxable supplies.
In the previous fiscal reporting period (ending 31 December), the company did not obtain any income. The company is registered during the current fiscal reporting period.
The 4% tax rate applies to the total amount of income registered in the statutory books during the current reporting period, except for certain items of income that are exempt from tax in accordance with local tax legislation.
• If the company becomes a VAT payer, it must apply the standard corporate income tax rate of 12%.
Farmers. The income tax rate for farmers is 7%.
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.
Dividends. In general, a 6% withholding tax is imposed on dividends paid to nonresidents and residents. A 15% withholding tax continues to be imposed on dividends related to the 2008 through 2011 fiscal years.
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.
C. Determination of trading income
General. Taxable income includes income earned from all sources, less deductible expenses and allowances provided for by the tax law. In general, companies may deduct ordinary and necessary expenses accrued during the tax year with respect to its business activities. However, they may not deduct the following items:
• Personal and family expenses of the company founders and employees
• Amounts paid for the acquisition of depreciable property
• Losses resulting from sales or exchanges of property, performance of works and provisions of services between related parties
• Unjustified expenses paid to related parties, including compensation, interest and rent
• Amounts paid to the holders of business patents
• Expenses related to exempt income
• Provisions for bad debts
Inventories. Assets valuation income is non-taxable. Assets valuation and impairment losses are nondeductible.
Provisions. If a court decision confirms that a debt owed to a company will not be recovered, the company may deduct for tax purposes the amount of the debt. Provisions for bad debts are not deductible for tax purposes.
Tax depreciation. In general, taxpayers are required to use the straight-line depreciation method to calculate the tax depreciation of fixed assets used in business activities.
For the use of the straight-line depreciation method, records on fixed assets’ depreciation must be maintained for each item separately. The depreciation rate for each fixed asset is determined as a ratio between 100% and its useful life set in the Catalogue of Fixed Assets approved by the Moldovan government.
By exception, large entities (classified under special criteria provided for by the law) may use the accelerated depreciation method for the first year of fixed asset operation. It is required that the depreciation calculated for the first year of use should not exceed 50% of the initial value of the fixed asset; and in the
A These are the general dividend withholding tax rates.
B In general, the rates apply if the beneficiary of the dividends is a company that holds directly at least 25% of the share capital of the payer.
(a) This rate applies if the effective beneficiary of the dividends is a company that has invested foreign capital of at least USD250,000 in the payer of the dividends.
(b) This rate applies if the beneficiary of the dividends is a company holding directly at least 25% of the capital of the payer.
(c) The 3% rate applies to royalties paid for the use of, or the right to use, patents, computer software, designs or models, plans, and secret formulas or processes, or for information concerning industrial, commercial or scientific experience. The 7% rate applies to other royalties.
(d) This rate applies if the beneficiary of the dividends is a company holding directly at least 10% of the payer of the dividends.
(e) This treaty will take effect on 1 January 2025.
(f) Royalties received for the use of, or the right to use, copyrights of literary, artistic or scientific works, including cinematographic films and films or tapes for radio or television broadcasting, are exempt from tax.
(g) No tax is withheld if the effective beneficiary of the interest is a financial institution.
(h) No tax is withheld if the effective beneficiary of the dividends is a company that directly holds at least 50% of the capital of the payer of the dividends and that has invested USD300,000 or an equivalent amount of national currency of a European Union (EU) Member State in the capital of the payer of the dividends.
(i) The 10% rate applies to royalties paid for the use of patents, trademarks, drawings or patterns, plans, secret formulas or manufacturing procedures as well as for industrial, commercial or scientific information. The 15% rate applies to other royalties.
(j) No tax is withheld if the beneficial owner of the dividends is a company (other than a partnership) that holds directly at least 50% of the capital of the payer of the dividends.
(k) No withholding tax is imposed on interest paid on bank loans or on interest paid with respect to the following:
• Sales on credit of industrial, commercial or scientific equipment
• Sales of goods between enterprises
(l) No tax is withheld if either of the following conditions is satisfied:
• The beneficial owner of the dividends is a company that holds directly or indirectly at least 50% of the capital of the company paying the dividends and that has invested at least GBP1 million (or the equivalent amount in another currency) in the capital of the company paying the dividends at the date of payment of the dividends.
• The beneficial owner of the dividends is a pension scheme.
(m) In general, the withholding tax rate for dividends is 6%. For dividends related to the 2008 through 2011 fiscal years, the withholding tax rate is 15%.