of December 27, 2019 No. 704
About approval of the Regulations on accounting treatment and depreciations of fixed assets for the purpose of the taxation
Based on part (17) article 26-1 of the Tax Code No. 1163/1997 (repeated publication: The official monitor of the Republic of Moldova, special release of February 8, 2017), with subsequent changes, DECIDES: the Government
1. Approve Regulations on accounting treatment and depreciations of fixed assets for the purpose of the taxation it (is applied).
2. Declare invalid the Order of the Government No. 289/2007 about approval of the Regulations on accounting treatment and depreciations of fixed assets for the purpose of the taxation (The official monitor of the Republic of Moldova, 2007, Art. No. 39-42, 305), with subsequent changes.
Deputy Prime Minister, Minister of Finance
Approved by the Order of the Government of the Republic of Moldova of December 27, 2019 No. 704
1. The purpose of this provision consists in the description of methodology of accounting and calculation of fixed asset depreciation for the purpose of the taxation, procedure for determination of deductible repair expenses of these means, and also calculation of tax result in case of fixed asset retirement of the company.
2. Action of this provision extends on the legal entities and physical person having the right to deductions for tax purposes of expenses, connected with depreciation and fixed asset maintenance.
For the companies which acquired this right during tax period (for example, in case of transition from special tax regime to general regime), the depreciation will be performed in proportion to months during which they have the right to deduction of the expenses connected with depreciation and fixed asset maintenance.
3. In this Provision the following determinations are used:
the term of useful functioning - the term established according to provisions of the Catalogue of fixed assets in months or advanced in years during which fixed asset depreciation for the purposes of the taxation is charged;
the used term of useful functioning – period of time from the moment of input of fixed assets in operation before completion of repair work or until the end of tax period during which they were exploited at the company and for which depreciation for the purpose of the taxation was calculated;
remaining period of useful functioning – difference between the established company for useful functioning and the used term of useful functioning;
fixed assets - the material property reflected in balance of the taxpayer according to the legislation which is held for use in business activity the cost of which presumably falls as a result of physical and obsolescence and which useful life exceeds one year, and its cost exceeds the limit provided in part (2) article 26-1 of the Tax Code No. 1163/1997;
the depreciation amount – the amount used for calculation of fixed asset depreciation for the purpose of the taxation to which the depreciation rate is applied and which can be provided by initial cost or the corrected initial cost of fixed assets which were subjected to process of repair or development;
book value - initial cost or the corrected cost or revaluated value of accounting object less depreciation and cumulative impairment losses;
the corrected initial cost – the initial cost of fixed assets corrected owing to repair or development from which depreciation is calculated and which constitutes initial cost / the capitalized initial cost reduced by cumulative depreciation amount before capitalization of expenses (subsequent costs) on repair/development and increased by expense amount (subsequent costs) which are subject to capitalization, suffered in the course of repair or development of fixed assets;
the capitalized initial cost – the initial cost increased by the amount of all incurred costs (subsequent costs) for repair or development;
not depreciated cost for the purpose of the taxation – difference between initial cost / the capitalized initial cost and depreciation amount calculated for the purposes of the taxation till the moment (including month) exit of fixed asset from the organization;
initial cost - acquisition value or creations of accounting object and direct costs on its delivery and reduction in the condition necessary for proper use.
4. Depreciation is for tax purposes charged on the fixed assets reflected in the balance sheet of the taxpayer according to the legislation and held for use in business activity which useful life constitutes more than one year, and cost exceeds the amount provided in part (2) article 26-1 of the Tax Code No. 1163/1997.
5. The fixed assets which are subject to depreciation for tax purposes also investments into the fixed assets which are the subject of the agreement of operational leasing, property hiring, concession, lease, free use, subhiring and other agreement types which grant the right to their use are recognized. Investments are understood as excess of the expenses connected with repair, improvements and other similar actions concerning the corresponding fixed assets over the specified expenses permitted to deduction in tax period according to the procedure established in part (11) article 26-1 of the Tax Code No. 1163/1997.
6. The fixed assets received in the form of fee in the authorized capital, and also the fixed assets received in economic board and held for use in business activity are depreciation subject.
7. Depreciation for tax purposes on constructions under construction, the parcels of land, non-current biological assets except for of mature non-current assets in the form of long-term plantings, long-term cultures, productive animals (horse and dog), on library stocks, movie theaters, museum and art objects, on the special buildings and constructions which are considered as monuments of architecture and art is not charged.
8. Fixed asset accounting is for tax purposes kept on each object separately.
9. Accounting and charge of depreciation of fixed assets is for tax purposes made based on the Catalogue about accounting treatment and depreciations of fixed assets for tax purposes, according to appendix No. 1 to this Provision.
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