ORDER OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF MOLDOVA

of May 17, 2024 No. 53

About approval of the Regulations on application of the general rule of counteraction to abuses

Based on Art. 189-1 (h 4) the Tax code (pereopublikovan in the Official monitor of the Republic of Moldova, the special edition of February 8 2007), I ORDER:

1. Approve Regulations on application of the general rule of counteraction to abuses it (is applied);

2. This order becomes effective from the date of its publication in the Official monitor of the Republic of Moldova.

Approved by the Order of the Ministry of Finance of the Republic of Moldova of May 17, 2024 No. 53

Regulations on application of the general rule of counteraction to abuses

1. The regulations on application of the general rule of counteraction to abuses (further - the Provision) establish the procedure of application of Art. 189-1 of the Tax code according to which, for the purposes of determination of the tax liabilities of the taxpayer the State Tax Administration does not take into account, and equally do not requalify transaction/action or the sequence of transactions/actions which, taking into account all essential facts and circumstances, are not reflection of that situation or that economic content which the taxpayer and which are undertaken for the purpose of receipt of tax advantage declares.

2. Tax advantage includes any of the following circumstances:

1) compensation of taxes (duties), charges, fees of social insurance and/or other payments in the national public budget;

2) understating of the amount or evasion from declaring of taxes (duties), charges, fees of social insurance and/or other payments in the national public budget;

3) application of the underestimated tax rate or release from the taxation.

3. Conditions of application of the general rule of counteraction to abuses are provided in the p. (5) Art. 189-1 of the Tax code.

4. The provision is applied to taxpayers to legal entities to residents and legal entities to nonresidents, performing activities by means of permanent mission in the Republic of Moldova.

5. In case of application of the general rule of counteraction to abuses the main objective of transactions/actions or one of main objectives of transactions/actions is determined.

6. In case of determination of the purpose or one of main objectives of transaction/actions/a series of transactions, other, than declared by the taxpayer, the following elements are analyzed, namely:

1) characteristics of subject of the transaction;

2) the functional analysis, including expected risks;

3) terms of agreement (additional) and contractual terms of transaction.

7. During the functional analysis are considered, but it is not exclusive, the following aspects:

1) the functions which are carried out by the parties in transaction/actions/a series of controlled and uncontrollable transactions;

2) the risks accepted by the parties in transaction/actions/a series of controlled and uncontrollable transactions;

3) distribution of risks/costs/benefits between the parties;

4) distribution of responsibility of the parties of transaction/actions/a series of controlled and uncontrollable transactions;

5) the tangible and intangible assets used by the parties in transaction/actions/a series of controlled and uncontrollable transactions.

8. The analysis of the functions which are carried out by the parties is performed, but is not exclusive, based on the legal documents concluded between the parties, financial accounting of the parties, the actual circumstances and actions taken by the parties for obligation fulfillment, following from the transaction.

9. In case of risk analysis, the controlled and uncontrollable transactions accepted by the parties in transaction/actions/a series, the following aspects are considered:

1) identification and the characteristic of the risks adopted by the parties based on the concluded legal acts;

Whether 2) is performed by the party accepting risk, control over creation of risk and management of it and also whether it is capable to realize it;

3) if the party accepting risk has financial opportunity to bear risk and the resources necessary for covering of this risk;

4) determination of real behavior of the parties of the transaction concerning control over risk.

10. If in analysis result it is determined that main objective of the transaction other, than declared by the taxpayer, the State Tax Administration will not take into account or to requalify transaction/action or series of transactions / actions.

11. If transaction/action or series of transactions/actions are not taken into account or will be reclassified, the taxpayer shall pay difference between earlier paid tax liabilities and the additional tax liabilities which resulted application of the general rule of counteraction to abuses with charge of penalty fee and/or penalty according to the Tax code.

12. The taxpayer shall prove that receipt of tax advantage was not main objective of transaction/action or series of transactions/actions and they have expected economic content, and the State Tax Administration carries out check and, depending on circumstances, determines the fact that the main objective of transaction/actions/a series of transactions is other, than declared by the taxpayer.

13. Application by the State Tax Administration of the general rule of counteraction to abuses is performed within tax control, at the same time this fact can be belongs also to other party of transaction/actions/a series of transactions, the legal resident person and legal nonresident persons acting through permanent mission in the Republic of Moldova.

14. After decision on the case of violation of the law the legal resident person, legal entities performing activities through permanent mission in the Republic of Moldova, being part of the transaction which is not subject to control will be informed on decision by the State Tax Administration within 30 working days from the date of decision. The third party who is not subject to control, having the right to adjust the income and/or expenses following from retrained transactions provided that such adjustment will not lead to reduction of the tax liability declared before the budget.

15. Reclassification of transactions/actions/a series of transactions between the parties by adjustment of the income and/or expenses is performed only for the purpose of the taxation without affecting civil, accounting, financial nature of transaction/actions/a series of transactions between the parties.

Disclaimer! This text was translated by AI translator and is not a valid juridical document. No warranty. No claim. More info