Corporate Tax in Moldova

The procedure of starting a business in Moldova has been simplified in the last few years which is why the country attracts numerous foreign investors. Running a business in Moldova also implies paying taxes in this country and the income tax is one of the most important direct levies here. While individuals are subject to the personal income tax, companies are subject to the corporate tax in Moldova.

Below, we explain the main provisions on the corporate tax applicable in Moldova. With the help of our company formation specialists in Moldova foreign investors can set up businesses in a very short time. We also offer tax advice in order for your company to obtain various incentives granted by the Moldavian government.

Tax residency in Moldova

In order to by subject to the corporate tax in Moldova a company must first be a tax resident here. This means that the respective company must have the legal seat or at least a management place in Moldova. This is an important aspect to consider because foreign companies can set up branch offices and subsidiaries in this country, and these business forms are taxed differently.

The tax residency of a company will determine how the corporate tax will be levied on the profits of a Moldavian company. Resident companies are taxed on their worldwide incomes, while certain entities established by foreign companies are taxed on the income generated in Moldova. This is the case of branch offices which will pay the corporate tax only on the income generated in Moldova.

If you want to open a company in Moldova and are considering what the best option is from a taxation point of view, our local consultants can assist you. We can also help you in applying for an EORI number in Moldova.

Rates of the corporate tax in Moldova

One of the most important reasons for starting a business in Moldova is the low corporate tax. With a standard rate of 12%, the corporate tax in Moldova is one of the lowest in Europe. However, Moldavian companies can benefit from lower corporate tax rates. For example, small and medium-sized companies not registered for VAT can opt for a special corporate tax of only 4%. Also, farming businesses are subject to a special tax regime which implies a reduced rate of 7% of the corporate tax.

The Ministry for Finance in Moldova is in charge of administering all the aspects of collecting taxes from individuals and companies through local agencies.

Income subject to the corporate tax in Moldova

In order to pay the corporate tax in Moldova, a company must declare its income with the tax authorities here. There are various types of incomes which can be subject to the corporate tax, among which:

1. capital gains which are taxed as regular income earned by a company, however, the income tax applies only on 20% of the capital;
2. companies are also subject to real property taxes which are established on annual basis by the local administrations;
3. social security contributions which must be paid by companies as employers and which are levied at a rate of 18% of the employee’s salary;
4. a withholding tax on dividend payments which is levied at a standard rate of 6%;
5. interest payments are also subject to taxation in Moldova at a standard rate of 12%;
6. royalties paid to resident and non-resident individuals and companies are subject to a 12% rate.

It is useful to know that dividend, interest and royalties payments can benefits from lower taxes provided that a double tax treaty with Moldova is in place.

Our company registration advisors in Moldova can offer more information on the income tax applicable to corporate incomes.

Corporate tax filings in Moldova

In order to pay the corporate tax in Moldova, a company must file tax returns for the income to be taxed. Financial statements must be filed for the calendar year, however, new companies must file financial statements for the period starting with the date of registration and to the end of the calendar year.

The tax returns for the previous year must be filed by the 25^th of the third month after the end of the tax year. Moldavian companies are subject to a self-assessment regime when it comes to filing corporate tax returns.

If you need help in filing tax returns, our Moldova company formation agents can advise you.

Corporate tax allowances in Moldova

Companies in Moldova can obtain various tax allowances and deductions, as follows:

• - expenses related to research and development activities can benefit from tax deductions;
• - charity and sponsorship are also subject to up to 5% deductions from the taxable income;
• - depreciation and amortization expenses incurred by companies can also benefit from limited deductions;
• - debts and financial losses can also benefit from certain deductions under specific conditions.

For complete information on the corporate tax and assistance in setting up a company in Moldova, please contact our representatives.