Employers in Moldova have a significant role in contributing to the social security and medical insurance of their employees. The primary employer tax contribution is towards social security. As of 2023, employers are required to contribute 24% of an employee's gross salary to the Social Security Fund. These contributions fund various social benefits, including pensions, healthcare, disability benefits, and unemployment benefits.

Social Security Contributions (SSC)

Employers contribute 24% of an employee's gross salary to the Social Security Fund. The contributions fund various social benefits, including pensions, healthcare, disability benefits, and unemployment benefits.

Medical Insurance Contributions

In addition to social security contributions, employers are also required to contribute an additional 4.5% of an employee's gross salary toward mandatory medical insurance.

Additional Considerations

While the contribution rates are fixed percentages, contributions could be capped at a maximum salary ceiling for certain benefits. Employers must also file regular reports with the National Social Insurance House (CNAS) and the National Health Insurance Company (CNAM), detailing employee payroll information and making contributions on their behalf.

In Moldova, the income tax system is progressive, meaning that the tax rates increase as the employee's income level rises.

Progressive Tax System

This system is designed to ensure that those who earn more contribute more to the state's budget.

Social Security Contributions

Employees are required to contribute 6% of their gross salary towards mandatory social security. These contributions cover pensions, healthcare, disability benefits, and unemployment benefits.

Medical Insurance Contributions

In addition to social security contributions, employees are also required to contribute an additional 4.5% of their gross salary towards mandatory medical insurance. This ensures that they have access to healthcare services when needed.

Personal Deductions and Exemptions

Moldovan tax law provides for a standard personal deduction for all taxpayers. This means that a certain amount of income is exempt from tax, reducing the overall tax liability.

In addition to the standard personal deduction, certain categories of taxpayers may be eligible for further specific deductions. These include individuals with disabilities and dependents, such as children or other family members. These additional deductions can further reduce the amount of tax owed.

In Moldova, the standard VAT rate is 20%. However, a reduced VAT rate of 8% applies to specific essential services such as accommodation services, passenger transport, and medical services.

Businesses providing taxable services with an annual turnover exceeding 1,200,000 MDL (Moldovan Leu) are generally required to register for VAT. Voluntary registration is also an option.

Taxable Services

VAT is charged on most services supplied within Moldova, with a few specific exemptions. Examples of taxable services include professional services (legal, accounting, consulting), telecommunication services, construction and repair services, and marketing and advertising services.

VAT Exemptions

Certain services are exempt from VAT in Moldova, meaning no VAT is charged. These include financial services (banking, insurance), educational services, and healthcare services.

VAT on Imported Services

Businesses receiving services from abroad may be subject to the reverse charge mechanism. This means that the recipient of the service in Moldova becomes responsible for accounting for and paying the VAT due.

VAT Invoicing

VAT-registered businesses must issue VAT invoices for all taxable supplies of services. These invoices must contain specific information as outlined by Moldovan tax law.

VAT Return Filing and Payment

VAT returns must be filed and VAT payments made on a monthly or quarterly basis, depending on the business's turnover.

Tax incentives can play a significant role in the financial strategy of businesses. They can reduce the overall tax burden and potentially lead to significant savings. Here are some of the general and sector-specific tax incentives available.

Reduced Corporate Income Tax (CIT)

Qualifying businesses may benefit from a reduced CIT rate for a specified period. This can lower the overall tax burden and increase profitability.

Accelerated Depreciation

Certain types of assets may be eligible for accelerated depreciation deductions. This allows businesses to deduct a larger portion of the asset's cost in the earlier years, leading to tax savings.

Sector-Specific Incentives

Agriculture

Tax incentives may be available for businesses involved in agricultural production and processing. These incentives can help to reduce costs and increase competitiveness.

Manufacturing

Companies investing in manufacturing activities might have access to tax holidays, reduced CIT rates, or customs duty exemptions. These incentives can make manufacturing operations more profitable.

Information Technology (IT)

IT companies may enjoy tax breaks or benefits for establishing operations in Moldova. These incentives can help to attract IT companies and stimulate the growth of the IT sector.

Free Economic Zones (FEZ)

Businesses operating within designated FEZs in Moldova benefit from an exceptional range of tax breaks. These include:

Exemption from Corporate Income Tax

Companies may have complete CIT exemption for a specified period. This can significantly reduce the tax burden and increase profitability.

Exemption from VAT and Excise Taxes

FEZ residents might be exempt from VAT and excise taxes on imported goods and services used within the zone. This can lower the cost of operations and increase competitiveness.

Customs Duty Exemptions

Companies could have duty-free import of raw materials, equipment, and other goods required for their operations. This can reduce costs and increase profitability.

Investment Promotion Schemes

The Attracting Investment Law provides tax incentives for significant investment projects in strategic sectors of Moldova's economy. These incentives can help to attract investment and stimulate economic growth.