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TAX CODE OF THE REPUBLIC OF MOLDOVA

Approved by the Laws of the Republic of Moldova of April 24, 1997, No. 1163-XIII, of December 17, 1997 No. 1415-XIII, of June 16, 2000 No. 1053-XIV, of June 16, 2000 No. 1055-XIV, of July 26, 2001 No. 407-XV, of April 1, 2004 No. 93-XV, of May 5, 2005 No. 67-XVI, of November 2, 2006 No. 317-XVI

(as amended on 16-12-2020)

The parliament accepts this code.

Section I General provisions

Article 1. The relations regulated by this code

(1) This code establishes the general principles of the taxation in the Republic of Moldova, legal status of taxpayers, the State Tax Administration and other participants of the relations regulated by the tax legislation, the principles of determination of the taxation object and accounting of the income and deductible expenses, procedure and conditions of accountability for violations of the tax legislation, and also procedure for appeal of actions of the State Tax Administration and its officials.

(2) This code governs the relations connected with execution of the tax liabilities on the national taxes (duties) and charges and also the general principles of determination and collection of the local taxes and charges are established.

(3) the Concepts and provisions provided by this code are applied only within tax and related other relations.

Article 2. Taxation system of the Republic of Moldova

The taxation system of the Republic of Moldova represents set of the taxes (duties) and charges, the principles, forms and methods of their establishment, change and cancellation, and also measures for ensuring their payment provided by this code.

Article 3. Tax legislation

(1) the Tax legislation consists of of this Code and other regulations adopted according to it.

(2) the Regulations adopted by the Government, the Ministry of Finance, the State Tax Administration and Customs Service under the Ministry of Finance, other central industry bodies of public management, and also local authorities of public management on the basis and in pursuance of of this Code shall not contradict its provisions or to go beyond its limits.

(3) In case of contradictions between the regulations specified in part (2), and provisions of this Code apply code provisions.

(3-1) In case of project development legislative and the regulations in the field of the taxation regulating business activity, the Government draws up the statement of the analysis of consequences of regulation. According to the legislative initiatives provided by deputies the statement of the analysis of consequences of regulation is drawn up by the Government in the course of coordination according to the methodology approved by it.

(4) the Taxation is performed based on of this Code and other regulations adopted according to it, officially published and existing for the term established for tax payment (duties) and charges.

(4-1) Tax procedure are applied in time and in the place of application if the law does not provide other.

(5) Interpretation (explanation) of provisions of this Code and other regulations adopted according to it gives the body which accepted them if in the specified act other is not established. Any interpretation (explanation) is subject to official publication.

Article 4. International agreements

(1) If the international treaty regulating the taxation or containing the regulations regulating the taxation, one of the parties of which is the Republic of Moldova, other rules and provisions are established, than those which are provided by the tax legislation are applied rules and provisions of the international treaty.

(2) part Provisions (1) are not applied in cases when the resident of the state with which the international treaty is signed is used for receipt of tax benefits by other person, not being resident of the state with which the international treaty is signed, and not having the right to tax benefits.

(3) Norma and the procedure according to which the Republic of Moldova provides/receives the mutual administrative aid in the tax matters according to international treaties, one of the parties of which is the Republic of Moldova, affirm the Government.

Article 5. General concepts

The following concepts are applied to the taxation purposes without change of the legal status of legal entities and physical persons provided by the current legislation:

1) Person - any physical person or legal entity.

2) the Taxpayer, the subject of the taxation - person who according to the tax legislation shall estimate and/or pay any tax (duty), collection, the corresponding penalty fee and penalty to the budget; person who according to the tax legislation shall hold or levy from other face and pay the specified payments to the budget.

3) Physical person:

a) citizen of the Republic of Moldova, foreign citizen, stateless person;

b) organizational form with the status of physical person according to the legislation, including the individual entrepreneur, peasant farm if this code does not provide other.

4) the Legal entity - any economic partnership or society, cooperative, the company, organization, fund, association, including created with participation of the foreign person, and other organizations, except for divisions of the listed organizations which do not have the isolated property, and also organizational forms with the status of physical person according to the legislation.

5) Resident:

a) any physical person which corresponds to one of the following requirements:

i) has the permanent residence in the Republic of Moldova, including:

- being on treatment or on vacation, either on study, or in business trip abroad;

- being the official of the Republic of Moldova who is located on duty abroad;

i-i) is in the Republic of Moldova at least 183 days within tax year;

b) any legal entity or organizational form with the status of physical person which activities will be organized or controlled in the Republic of Moldova or the main place of implementation of activities of which is the Republic of Moldova.

6) Nonresident:

a) any physical person which is not resident according to the subitem and) Item 5) or, though conforms to requirements of the subitem and) Item 5), stays in the Republic of Moldova:

- as person having the diplomatic or consular status or as the member of the family of such person;

- as the employee of the international organization created on the basis of the international treaty, one of the parties of which is the Republic of Moldova, or as the member of the family of such employee;

- on treatment, or on vacation, or on study if it is the single purpose of stay of physical person in the Republic of Moldova;

- only for following from one foreign state in other foreign state through the territory of the Republic of Moldova (transit following);

b) any legal entity or organizational form with the status of physical person which are not meeting the requirements of the subitem b) Item 5).

7) the Individual entrepreneur - the physical person registered in accordance with the established procedure, performing business activity without formation of legal entity.

8) Peasant farm - the agricultural enterprise having the status of physical person and formed according to the legislation.

9) ceased to be valid according to the Law of the Republic of Moldova of 16.12.2016 No. 281

10) the Shareholder - any person who is the owner of one or more shares of joint-stock company.

11) the Unitholder - any person owning share of the capital of the legal entity.

12) the Affiliated person - the member of the family of the taxpayer or person who controls the taxpayer is controlled by the taxpayer or is together with him under control of the third party. For the purposes of this Item:

a) the family of the taxpayer includes: to the spouse (spouse) of the taxpayer; parents of the taxpayer; children of the taxpayer and their spouses; grandfather and grandmother of the taxpayer; grandsons of the taxpayer and their spouses; brothers and sisters of the taxpayer and their spouses; great-grandfather and great-grandmother of the taxpayer; great-grandsons of the taxpayer and their spouses; brothers and sisters of parents of the taxpayer and their spouses; nephews of the taxpayer and their spouses; brothers and sisters of the grandfather and grandmother of the taxpayer and their spouses; children of the brother and sister of parents of the taxpayer and their spouses; children of nephews of the taxpayer and their spouses; and also the listed persons from the spouse (spouse) of the taxpayer;

b) control is understood as ownership (directly or through one or more affiliated persons) by 50 and more percent of the capital or voting powers of person. At the same time the physical person is considered as person owning all shares in the capital belonging directly or indirectly to members of his family.

13) Business entity - any person performing business activity.

14) Non-profit organization - the legal entity who is not pursuing commercialization as the purpose of the activities and not using any part of property or the income for benefit of any organization member, the founder or the individual.

15) Permanent mission - the permanent place of activities through which the nonresident fully or partially performs business activity in the Republic of Moldova is direct or through the agent with the dependent status, including:

a) management place, division, office, factory, plant, workshop, and also mine, oil or gas well, pit or any other place of production of natural resources or cultivation of crops;

b) the building site, construction, assembly or assembly object or the related activities for technical supervision, servicing and operation of the equipment only if such platform, object or activities proceed during the period exceeding six months;

c) sales of goods from the warehouses located in the territory of the Republic of Moldova and belonging to the nonresident or leased by it;

d) rendering other services, conducting other activities during the period exceeding three months except for qualified in Item 15-1) and also works on the employment contract (agreement) and independent professional activity;

e) implementation in the Republic of Moldova any activities answering at least to one of the signs provided in subitems and) - d), through the agent with the dependent status or content by this agent in the Republic of Moldova of inventories of goods or products from which it delivers goods or products on behalf of the nonresident.

For the purposes of of this Code permanent mission of the physical person - the nonresident the permanent base is considered.

15-1) In departure from Item provisions 15) the permanent mission does not assume implementation by the nonresident of the Republic of Moldova of types of activity of preparatory, auxiliary or other nature in the absence of the criteria of permanent mission listed in Item 15). Treat types of activity of preparatory, auxiliary or other nature, in particular:

a) use of constructions only for the purposes of storage or goods demonstration or products belonging to the nonresident;

b) stock keeping of the goods or products belonging to the nonresident only for the purposes of storage or demonstration;

c) stock keeping of the goods or products belonging to the nonresident only for the purposes of conversion by other person;

d) content of the permanent place of activities only for the purposes of purchase of goods by the nonresident;

e) content of the permanent place of activities is exclusive for the purpose of collection and/or distribution of information, marketing, advertizing or market research of goods (services) realized by the nonresident if such activities are not the main (regular) activities of the nonresident;

f) content of the permanent place of activities for the purposes of agreement signature by person on behalf of the nonresident if agreement signature happens according to detailed written instructions of the nonresident;

g) implementation of the activities provided by the subitem b) Item 15), no more than within six months.

16) Business activity, business - any kind of activities of person according to the legislation, except for from work on the employment contract (agreement) which is performed for the purpose of income acquisition or implementation of which irrespective of the purpose of activities results the income.

17) Services - the material and non-material consumer and production services including cession of property in lease, assignment of rights on use of any goods; construction, repair, research, developmental and other work.

18) the Agreement of financial leasing - any agreement of leasing answering at least to one of the following conditions:

a) the risks and benefits connected with the property right to the thing which is leasing subject are transferred to the leasing recipient at the time of the conclusion of the agreement of leasing;

b) the amount of leasing payments constitutes at least 90 percent of original cost of the leased thing;

c) the agreement of leasing directly provides transfer upon termination of the duration of the agreement to the leasing recipient of the property right to the thing which is leasing subject;

d) the term of leasing exceeds 75 percent of term of useful service of the thing which is leasing subject.

For the purpose of the taxation in case of financial leasing the leasing recipient is considered as the owner of the property received in leasing.

19) the Agreement of operational leasing - any agreement of leasing which is not corresponding to any of terms of the contract of financial leasing;

20) ceased to be valid;

21) the Market - the system of the economic relations developing in production process, addresses and distributions of goods, rendering services, and also cash flow of which freedom of subjects in the choice of buyers and sellers, determination of the prices, forming and use of resource sources is characteristic.

22) the Wholesale market - type of the market on which goods, services, as a rule, are implemented by one persons to other persons performing business activity, using further goods, services in production process or realizing them in the market of retail trade.

23) the Market of retail trade - type of the market on which goods, services are implemented to the population for final consumption.

24) the Market on lowering - type of the market on which the offer exceeds demand or the goods, services which are not conforming to the quality standards or damaged as a result of natural disasters, catastrophic crashes, other extraordinary events taking place are implemented, or the seller experiences the financial difficulties caused by its temporary insolvency, liquidation or bankruptcy or there are other, similar situations in case of which goods, services are offered to sale at the price below the prices developing in the market.

25) the Closed market - type of the market on which sales of goods, services is performed between participants of common property or between affiliated persons. The prices in the closed market are not the proof of market price.

26) Market price, market value - the price of goods, service which developed in case of interaction of the demand and supply in the wholesale market of identical goods, services, and in the absence of identical goods, services - as a result of the bargains concluded in the corresponding wholesale market between persons who are not participants of common property or affiliated persons. Transactions between participants of common property or affiliated persons can be taken into account only provided that their interdependence did not affect results of such transactions.

Sources of information on market prices of the moment of the conclusion of the transaction are recognized:

a) information of state bodies of statistics and the bodies regulating pricing; and in case of its absence

b) the information on market prices published in printing editions or which is brought to the attention of the public by mass media; and in case of its absence

c) the official and/or published information on stock exchange quotations (the taken place transactions) on the next to the location (residence) of the seller (buyer) to the exchange, and in the absence of transactions at the specified exchange or in case of realization (acquisition) at other exchange - information on stock exchange quotations at this other exchange, and also information on quotations on government securities and obligations.

The taxpayer has the right to provide to the State Tax Administration information from other sources on market prices at the time of transfer of goods, services, and the State Tax Administration has the right to use the provided information in the presence of the bases for recognition of its reliable.

26-1) Internal cost – the actual cost of the goods imported on the territory or exported from the territory of the Republic of Moldova, which is not including expenses on transportation, insurance, and also loading expenses, unloading and overload of goods.

27) Discount - price discount of goods, service, foreign currency and other financial assets.

28) the Fiscal code – the personal identification taxpayer number appropriated according to the procedure, established by this code. Are recognized fiscal codes and do not require assignment in the procedure provided by this code:

a) the state identification number assigned by the structure given the right of state registration, and specified in the decision on registration of the legal entities and individual entrepreneurs who are subject to state registration according to provisions of the Law on state registration of legal entities and individual entrepreneurs No. 220-XVI of October 19, 2007;

b) the state identification number assigned by the structure given the right of state registration, and specified in the registration certificate of the legal entities who are subject to state registration according to provisions of the Law on non-profit organizations No. 86/2020;

c) personal code (IDNP) specified on the back identity certificates of the physical person – the citizen of the Republic of Moldova;

d) series and passport number of the physical person – the citizen of the Republic of Moldova who does not have the identity certificate, and for not having both passports – series and certificate number about the birth or other identification document;

e) personal code (IDNP) specified on the back the residence permit of physical person – the foreign citizen or the stateless person having the taxation object in the territory of the Republic of Moldova or having the tax liabilities, and in the absence of the residence permit – series and number (without gaps) passports of country of source of the corresponding person.

29) Division - the structural unit of the company, organization or organization (branch, representation, department, department, shop, warehouse, etc.) located outside their main location which performs some functions of the company, organization or organization.

30) the Subdivision code - number assigned by the State Tax Administration to division of the taxpayer according to the procedure, established by the State Tax Administration. Process of assignment of number by the State Tax Administration is based on the analysis of the statement and copies of the documents confirming creation of the divisions provided by taxpayers. Submission of other documents by taxpayers or issue of documents (certificates, permissions, confirmations, etc.) by the State Tax Administration is not required.

31) Ceased to be valid according to the Law of the Republic of Moldova of 26.10.2012 No. 235

32) the Bad debt - accounts receivable, impossible to repayment in cases:

a) liquidations of business entity without legal successor;

b) lack of property at the physical person or legal entity performing business activity and announced by insolvent;

c) absence or insufficiency at the physical person which is not performing business activity and peasant farm or the individual entrepreneur within two years from the date of emergence of debt of property which could be collected on account of repayment of this debt;

d) the death of the physical person and lack of other faces obliged to fulfill its obligations under the law;

e) impossibility to search for the physical person, including members of peasant farm or the individual entrepreneur who was disposed from the permanent residence during the term of limitation period established by the civil legislation;

f) availability of the relevant act of degree of jurisdiction or the legal executive (the decision, determination or other document provided by the current legislation) according to whom debt collection is impossible;

g) it is long in the amount up to 1000 lei which prescriptive limit expired.

The debt is recognized hopeless the cases stated above, except for the subitem g), only in the presence of the relevant document confirming approach of this or that circumstance of involvement in certain legal form according to the legislation.

33) the Tax benefit - tax amount (duties) or the collection which is not brought in the budget in the forms established in Item g) parts (9) Article 6.

34) the Agent with the dependent status - any person, which based on the contract with the nonresident:

a) represents the interests of the nonresident in the Republic of Moldova;

b) acts in the Republic of Moldova on behalf of this nonresident;

c) has and, as a rule, uses in the Republic of Moldova powers on the conclusion of agreements or coordination of their essential conditions on behalf of the nonresident, creating at the same time consequence in law for this nonresident.

35) the Agent with the independent status - any person which is not meeting the requirements of Item 34).

36) Professional services - independent scientific, literary, artistic, educational or teaching activities, and also the independent activities of engineers, architects, auditors and accountants performed according to the current legislation. Provisions of this Item do not extend to persons specified in Items 36-2) and 36-3).

36-1) Independent activities – the business activity performed in individual procedure by physical resident person without registration of form of business from which the income results.

36-2) Professional activity in the sphere of justice – the permanent activities of the lawyer, lawyer-trainee, public notary, legal executive, the authorized managing director performed within the forms of the organization of activities provided by the law, mediator, the court expert in bureau of judicial examination.

36-3) Professional activity in the field of health care - independent implementation of professional profession of a physician in one of the forms of the organization of professional activity provided by the Law on health protection No. 411/1995.

37) Ceased to be valid according to the Law of the Republic of Moldova of 23.12.2011 No. 267

38) the Advertizing campaign - sales promotion method by the organizations of the tenders, games, lotteries which are publicly announced and carried out during the limited period with delivery of gifts, prizes, prizes and also the organization of these actions by bodies of the public power and public organizations with other, than sales promotion, the purpose;

39) the Large taxpayer - the taxpayer determined according to the selection criteria of large taxpayers developed by the State Tax Administration, and included in the List of business entities - large taxpayers.

40) the Control and cash equipment - the control and cash equipment with fiscal memory, other information systems, including the electronic devices (like the terminal of cash payment, the cash-in terminal, the foreign exchange device, and also others, having special and identifiable application programs) with functions of the control and cash equipment intended for registration of cash transactions (cash payments), storages, listings, enciphering and transfer on the server of the State Tax Administration of financial and reporting information providing protection of working algorithms and the registered data from unauthorized changes.

40-1) The payment instrument – the personalized means (payment card, the mobile phone, etc.) and/or any series of the procedures (technical – PIN codes, TAN codes, other types of codes, the login/password, etc. or functional – the credit translation, direct debiting) approved between the user of payment services and the payment service provider and used by the user of payment services for initiation of the payment order.

41) Tax year - calendar year which begins on January 1 and comes to the end on December 31.

42) the Certificate on assignment of fiscal code – the document confirming capture on tax accounting. The certificate on assignment of fiscal code is granted according to the procedure, established by this code, except for taxpayers for whom fiscal code is the code assigned according to subitems a), b), c), d) and e) Item 28).

44) Samples of goods – any unit, representing goods type, manner of provision and which quantity, for goods of the same type, do not allow its use for the purpose of, orders for goods of this kind, other than obtaining.

45) the Provisional individual tax solution – the administrative act published by the State Tax Administration for the purpose of the permission of the statement of physical person and the legal entity performing business activity concerning application of the tax legislation to specific future certain situations and/or transactions.

46) the Main housing – housing which meets in total the following conditions:

a) at least three years consist in property of the taxpayer;

b) constitutes the place of residence/stay of the taxpayer within the last three years until alienation.

Article 6. Taxes (duties) and charges and their types

(1) the Tax (duty) the obligatory payment having non-paid nature and which is not connected with making by authorized body or its official of certain and specific actions in advantage or concerning the taxpayer who paid it is recognized.

(2) Collection the obligatory payment having non-paid nature and not being tax (duty) is recognized.

(3) Other payments made within the relations regulated by the non-tax legislation do not belong to the category of the obligatory payments which are referred to as with taxes (duties) and charges.

(4) In the Republic of Moldova the national and local taxes (duties) and charges are levied.

(5) enter system of the national taxes (duties) and charges:

a) income tax;

b) value added tax;

c) excises;

d) private tax;

e) customs duty;

f) road charges;

g) property levy;

h) the single tax from residents of information and technological parks.

(6) enter system of the local taxes and charges:

a) non-personal tax;

a-1) private tax;

b) charges for natural resources;

c) collection on improvement of the territories;

d) collection for the organization of auctions and lotteries within administrative and territorial unit;

e) collection for advertizing;

f) collection for use of local symbolics;

g) collection for objects of trade and/or objects for rendering services;

h) market collection;

i) collection for temporary residence;

j) resort collection;

k) collection for provision of services on motor transportation of passengers along municipal, city and rural (municipal) routes;

l) collection for the parking of motor transport;

m) collection from owners of dogs;

 n) Ceased to be valid according to the Law of the Republic of Moldova of 23.12.2011 No. 267

 o) Ceased to be valid according to the Law of the Republic of Moldova of 27.12.2012 No. 324

p) collection for the parking;

q) Ceased to be valid according to the Law of the Republic of Moldova of 27.03.2014 No. 47

r) collection on sanitary cleaning;

s) collection for advertizing devices.

(7) the Relations connected with all listed in parts (5) and (6) taxes (duties) and charges, are regulated by this code and other regulations adopted according to it.

(8) Taxes (duties) and charges listed in parts (5) and (6), are based on the following principles:

a) taxation neutrality - providing by means of the tax legislation of equal conditions for investors, the local and foreign capital;

b) reliability of the taxation - content of the clear legal regulations which are not allowing any interpretation, the clarity and accuracy of terms, methods and amounts of payment for each taxpayer allowing them is easy to trace impact of the decisions relating to financial management on their tax burden;

c) tax justice - identical interpretation of the physical persons and legal entities performing activities in identical conditions to provide equality of the tax liabilities;

d) tax stability - implementation of any changes and amendments of provisions of the tax legislation is direct by introduction of amendments and amendments to this code;

e) efficiency of the taxation - collection with the minimum costs of the taxes (duties) and charges, most acceptable for taxpayers.

(9) In case of establishment of taxes (duties) and charges the following elements are determined:

a) the taxation object - taxable matter;

b) the subject of the taxation (taxpayer) - person specified in Item 2) of Article 5;

c) source of the tax discharge (duty) or collection - source from which the tax (duty) or collection is paid;

d) taxation unit - the unit of measure expressing taxation object size;

e) rate (rates) of the taxation - the single amount of tax (duty) or collection in the ratio with the taxation object;

f) payment due date of tax (duty) or collection - the period during which the taxpayer shall pay tax (duty) or collection, in the form of interval of time or the fixed day of payment;

g) tax benefits - elements which are considered in case of taxation object assessment, determination of the amount of tax (duty) or collection, and also in case of their collection, in type:

- partial or full relief from tax (duty) or collection;

- partial or full relief from tax payment (duties) or charges;

- decrease in rate of taxes (duties) or charges;

- reduction of the taxation object;

- tax deferral (duties) or charges;

- payments by installments of repayment of the tax liability.

The releases provided by Articles 33, 34 and 35, reduced VAT rate and exemption of the VAT tax benefits do not reckon with the deduction right.

(10) Taxes (duties) and charges levied according to this code and other regulations adopted according to it are one of sources of the income of the government budget and local budgets. Depending on property accessory the private tax is paid to the government budget or to the budget of administrative territorial unit. The income tax from physical persons is the regulating profitable source of the budget system. For autonomous territorial education with special legal status the regulating profitable sources of the budget system are also income tax from legal entities (collected in the territory of autonomous territorial education), the value added tax (regarding the value added tax on the goods and services delivered by business entities of autonomous education) and excises on the excise goods (products) made in the territory of this education.

Article 7. Establishment, change and cancellation of the national and local taxes (duties) and charges

(1) the National and local taxes (duties) and charges are established, change or cancelled only by introduction of amendments and amendments to this code.

(1-1) Voided.

(2) Establishment new, in addition to provided by this code, or cancellation of the operating national and local taxes (duties) and charges, and also change of the operating taxes (duties) and charges regarding determination of subjects of the taxation, tax base, change of rates and application of privileges within tax (calendar) year are allowed only along with entering of corresponding changes into the government budget and local budgets.

(3) Voided according to the Law of the Republic of Moldova of 27.03.2014 No. 47

(4) Decisions of bodies of public management of municipiums, the cities, villages (communes), and also other administrative-territorial educations created according to the legislation on enforcement, on introduction within the competence of changes into rates, procedure and payment due dates and about application of privileges are accepted within tax year along with entering of corresponding changes into local budgets.

(5) in pursuance of part provisions (articles 6 the taxpayers having divisions and/or the taxation objects estimate 10) and settle by payment the tax liabilities connected with the divisions/taxation objects in the place of their stay (except for the value added tax, excises and charges intended for transfer in road fund, the income tax established according to Chapter 7-1 of the Section II, and the single tax from residents of information and technological parks).

(6) the Divisions located in administrative and territorial units which budget is not component of the national public budget pay taxes and fees to the local budget in the main location of the company, organization, organization.

Article 8. Rights and obligations of the taxpayer

(1) the Taxpayer has the right:

a) free of charge to receive from the State Tax Administration and service on collection of the local taxes and charges information on the operating taxes (duties) and charges and regulations regulating procedure and conditions of their payment;

b) expect the correct relation from the bodies performing powers on tax administration and their officials;

c) represent in the bodies performing powers on tax administration, the interests independently or through the representative;

d) direct annually percentage share in the amount of 2 percent of the income tax amount, transferred annually into the budget, to receivers of percentage assignment according to Article 15-2 on condition of lack of debts on the income tax for the previous tax periods;

e) receive delay, payment by installments, tax offsettings according to the procedure and on the conditions established by this code;

request and receive e-1) from the State Tax Administration the provisional individual tax solution according to the procedure and on the conditions established by this code;

f) represent to the bodies performing powers on tax administration, and their officials of the explanation on calculation and tax payment (duties) and charges;

g) appeal in accordance with the established procedure the law of the decision, action or failure to act of the bodies performing powers on tax administration and their officials;

h) have other rights established by the tax legislation.

i) receive the tax benefits provided by the tax legislation for tax period in which it satisfies all established conditions;

(2) the Taxpayer shall:

a) observe procedure for state registration (re-registration) and implementation of business activity;

b) get registered in division of the State Tax Administration in the location determined by constituent (registration) documents and receive the certificate on assignment of fiscal code. This provision is not applied to persons for whom fiscal code is the state identification number, except for taxpayers for whom fiscal code is the code assigned according to subitems a), b), c), d) and e) Item 28) of Article 5. The taxpayers registered by the bodies given the right of state registration are registered in the relevant division of the State Tax Administration according to information provided by these bodies;                   

c) keep financial accounting in forms and according to the procedure, established by the legislation, constitute and represent to the State Tax Administration and service on collection of the local taxes and charges stipulated by the legislation tax statements, to ensure safety of documents of financial accounting according to requirements of the legislation, to perform acceptance of cash by means of the control and cash equipment, observing the provisions approved by the Government, including the List of types of activity which specifics allow to perform acceptance of cash without use of the control and cash equipment;

d) to authentically declare data on income gained from any kind of business activity and on other taxation objects;

e) according to part provisions (5) Article 7 timely and in full to pay assessed taxes (duties) and charges to the budget, providing the proper accuracy and reliability of the submitted tax reports;

f) when conducting checks of observance of the tax legislation on the first demand of to represent to officials of the bodies performing powers on tax administration the accounting documents, tax reports and other documents and data connected with implementation of business activity, calculation and tax payment (duties) and charges in the budget and with provision of privileges to resolve access to electronic system of financial accounting in case of conducting computer accounting;

f-1) in case of requesting of the provisional individual tax solution to represent to the State Tax Administration according to its first requirement reliable information, documents, explanations and/or corroborating evidences of activities, circumstances and/or future transactions;

g) provide when conducting checks of observance of the tax legislation easy access of officials of the bodies performing powers on tax administration to production, storage, trade and other facilities and places (except the rooms used only under housing) for their inspection for the purpose of determination of accuracy of the data of accounting documents, reports, tax declarations, calculations and accomplishment of obligations to the budget;

h) be present when conducting checks of observance of the tax legislation, sign the act of results of check, give oral and written explanations;

i) in case of wrong calculation or the wrong determination by the State Tax Administration of the amount of any tax, penalty fee, percent or penalty to prove it documentary;

j) carry out the decisions of the bodies performing powers on tax administration made by results of checks and other bodies equipped with control functions with observance of requirements of the tax legislation;

k) fulfill other duties established by the tax legislation.

(3) in case of absence of the director of its obligation, provided by subitems f) and g) parts (2), are carried out by others official and responsible persons of the subject of the taxation within the powers.

Article 9. Tax administration

Tax administration means activities of the authorized state bodies responsible for complete and timely ensuring receipt in budgets of all levels of taxes (duties) and charges, penalty fee and penalties, and also their actions for criminal prosecution in the presence of the circumstances testimonial of the facts of tax offenses. Actions for tax administration are applied to the subjects specified in Item d) parts (1) Articles 162, only in the cases which are specially provided by this code.

Article 10. Activities of the bodies performing powers on tax administration

(1) the Organization of activities and activities of the bodies performing powers on tax administration are regulated according to the legislation of the Republic of Moldova and international treaties, one of the parties of which is the Republic of Moldova.

(2) Organa, the performing powers on tax administration and their officials, inadequate the fulfilling duties, bear responsibility according to the legislation.

Article 11. Protection of the rights and interests of the taxpayer

(1) Protection of the rights and interests of the taxpayer is performed in the judicial or other procedure provided by this code and other acts of the legislation. All doubts arising in case of application of the tax legislation shall be interpreted for benefit of the taxpayer.

(2) the Damage caused to the taxpayer by the bodies performing powers on tax administration and their officials owing to improper execution of the obligations by them is subject to compensation according to the legislation.

(3) the State Tax Administration prepares materials for return to the taxpayer of the amount of overpayment and added on this interest amount (including the means which illegally are charged-off from the taxpayer according to orders of the State Tax Administration) in accordance with the established procedure.

Section II Income tax

Chapter 1 General provisions

Article 12. Concepts

For the purposes of this Section the following concepts are applied:

1) the Royalty (periodical payments) – the payments of any kind received as compensation for use or transfer of right to use of any copyright and/or the related rights, including to the literary work, art or science including movies and movies or records for television or broadcasting, any patent for the invention, the trademark, the drawing or model, the plan, the computer program, confidential formula or process, for use or transfer of right to use of information concerning industrial, commercial or scientific experience.

For the purposes of this concept do not constitute royalty:

a) ceased to be valid according to the Law of the Republic of Moldova of 15.12.2017 No. 288

b) payments in case of acquisition of the software intended only for work of this software including installation, implementation, storage, settings or updating;

c) payments in case of complete acquisition of copyright of the software or the limited right of its copying only for the purpose of its use by the user or for the purpose of its sale within the agreement of distribution;

d) payments for receipt of the diffusion rights of product or service without provision of the right of reproduction;

e) payments for access to companions by lease of transponders or for use of cables or pipelines for transportation of energy, gas or oil if the client is not the owner of transponders, cables, pipes, optical fibers or similar technologies;

f) payments for use of services of electronic communications in agreements on roaming, radio frequencies, electronic communications between operators.

2) Annuities - regular payments of insurance sums, pensions or benefits.

3) the Dividend - income gained from distribution of net profit between shareholders (unitholders) according to share in the authorized capital, except for income gained in case of complete liquidation of business entity.

4) the Taxable income - gross income, including the privileges provided by the employer, received by the taxpayer from all sources in certain tax period, minus the deductions and releases relating to this income to which the taxpayer has the right according to the tax legislation.

4-1) The estimated income - the income, certain (received) by application of indirect methods and sources in the course of tax audits, including owing to organization of tax posts.

5) the Investment revenue - income gained from capital investments and investments in financial assets if participation of the taxpayer in the organization of such activities is not regular, permanent and considerable.

6) the Financial income - income gained in the form of royalty (periodical payments), annuities from property leasing, property employment, usufruct, on exchange currency difference, from gratuitously the arrived assets, other income gained as a result of financial activities if participation of the taxpayer in the organization of such activities is not regular, permanent and considerable.

7) Percentage charges, the income in type of percent - any income gained on debt obligation of any kind (irrespective of method of its registration), including the income on money deposits, income gained on the basis of the agreement of financial leasing.

8) The option - the condition providing option.

9) the Futures transaction - transaction type at stock or commodity exchange.

10) Distribution - the payments performed by business entity to one or more owners having the right to such payments.

11) the Deduction - the amount subtracted from gross income of the taxpayer when calculating the taxable income according to provisions of the tax legislation.

12) Release - the amount subtracted from gross income of the taxpayer when calculating the leviable income according to Articles 33, 34 and 35.

13) Offsetting - the amount withheld and/or previously paid to which the taxpayer has the right to reduce tax amount.

14) the Prize - the gross income gained from gamblings, lotteries and advertizing campaigns both in cash and in non-cash form. The prize received through networks of electronic communications represents the total amount withdrawn from the game account. For the purpose of application of this concept the prize from gamblings in casino, in gaming machines, in bet on sports competitions / actions represents documentary confirmed positive difference between the amount of prize and the amount of rates. In other cases the prize represents the total amount of prize.

15) Percentage assignment – process within which taxpayers direct percentage share in the amount of 2 percent of the income tax amount, transferred annually into the budget, to receivers of percentage assignment according to Article 15-2;

16) Liquidating payments – the payments in cash and/or non-cash form transferred to participants/shareholders/members/founders in case of asset allocation of the liquidated subject after satisfaction of requirements of creditors.

Article 12-1. Tax period on the income tax

(1) the tax period on the income tax is understood as calendar year upon termination of which the taxable income is determined and the tax amount which is subject to payment is estimated.

(2) For the newly created companies tax period the period from the date of registration of the company before the termination of calendar year is considered.

(3) For the business entity who made the decision on liquidation within calendar year, the tax period is considered:

a) the period from the beginning of calendar year before date of creation of the pro liquidation balance sheet;

b) the period from the beginning of calendar year before approval date of the final liquidation balance sheet.

(For the reorganized companies tax period the period from the beginning of calendar year before date of exception of the company of the State register is considered 3-1).

(For the business entities who received resident status of the information and technological park within tax year, tax period the period since the beginning of calendar year until the end of calendar month in which the park resident status is received is considered 3-2).

(For business entities at whom within tax year the resident status of the information and technological park responds tax period the period from the first day of the month following after month in which the park resident status, before the termination of calendar year is withdrawn is considered 3-3).

(4) In departure from part provisions (1) for business entities who according to provisions of the Law on financial accounting have the right to apply the accounting period, other than calendar year, the tax period on the income tax corresponds to the accounting period for preparation and submission of financial statements. In this case the tax period is constituted by any 12 consecutive months.

(5) the Tax period specified in part (4), changes further only if the accounting period for preparation and submission of financial statements is changed according to provisions of the Law on financial accounting.

(6) Before application of new tax period according to part provisions (4) or (5) the business entity shall:

a) inform the State Tax Administration and submit it the documents connected with change of tax period in the procedure established by it;

b) apply the transition tax period and rules established in Chapter 7-2 of this Section.

Article 13. Subjects of the taxation

(1) Subjects of the taxation are:

a) the legal and physical resident persons of the Republic of Moldova performing the business activity, faces rendering professional services, and also the faces performing professional activity in the sector of justice and in the field of health care which during tax period gain income from any sources which are in the Republic of Moldova and also the income from any sources which are outside the Republic of Moldova;

b) physical resident persons - citizens of the Republic of Moldova who do not perform business activity and during tax period gain the taxable incomes from any sources which are in the Republic of Moldova and from any sources which are outside the Republic of Moldova for their activities in the Republic of Moldova;

b-1) the physical resident persons performing independent activities and during tax period gaining income from any sources which are in the Republic of Moldova and from any sources which are outside the Republic of Moldova for their activities in the Republic of Moldova;

c) physical resident persons - citizens of the Republic of Moldova who do not perform business activity also gain investment and financial income from any sources which are outside the Republic of Moldova;

d) physical resident persons - the foreign citizens and persons without citizenship performing activities in the territory of the Republic of Moldova and gaining income from any sources which are in the Republic of Moldova and from any sources which are outside the Republic of Moldova for their activities in the Republic of Moldova, except for investment and financial income from any sources which are outside the Republic of Moldova;

e) physical nonresident persons who do not perform business activity in the territory of the Republic of Moldova and during tax period gain income according to Chapter 11 of this Section.

(2) Subjects of the taxation shall declare the gross income gained from all sources.

Article 14. Taxation object

(1) the Taxation object is:

a) the income from all sources which are in the Republic of Moldova, and also from any sources which are outside the Republic of Moldova, received by the legal and physical resident persons of the Republic of Moldova performing business activity, persons rendering professional services and also persons performing professional activity in the sector of justice and in the field of health care minus deductions and releases to which they have the right;

b) the income from all sources which are in the Republic of Moldova, including the privileges provided by the employer, and also from any sources which are outside the Republic of Moldova, for activities in the Republic of Moldova, received by physical resident persons - the citizens of the Republic of Moldova who are not performing business activity minus deductions and releases to which they have the right;

b-1) the income from all sources which are in the Republic of Moldova, and also from any sources which are outside the Republic of Moldova, for activities in the Republic of Moldova, received by the physical resident persons performing independent activities;

c) the investment and financial income from any sources which are outside the Republic of Moldova received by physical resident persons - the citizens of the Republic of Moldova who are not performing business activity;

d) the income from all sources which are in the Republic of Moldova, and from any sources which are outside the Republic of Moldova, for activities in the Republic of Moldova, except for investment and financial income from any sources which are outside the Republic of Moldova, received by physical resident persons - the foreign citizens and stateless persons performing activities in the territory of the Republic of Moldova;

e) income gained in the Republic of Moldova by the physical nonresident persons who are not performing business activity in the territory of the Republic of Moldova.

(1-1) It is excluded;

(1-2) It is excluded;

(2) Sources of the income are determined in Chapters 2 and 11.

(3) In departure from provisions of parts (1) and (2) this Article the taxation object on the prizes and the income specified in Chapters 10-1, 10-2 and 10-3, Article 88-1 and parts (3), (3-1), (3-3), (3-4), (3-5) and (3-6) Articles 90-1, and also according to the income specified in part (2) Article 14-1, this prize and/or the income is only.

Article 14-1. The special rules applied to residents of information and technological parks and their workers

(The Managing resident subjects of information and technological parks to whom the tax regime set in Chapter 1 of the Section X is applied have no 1) obyazatelst in on tax on entrepreneurial income (operating activiies) according to this Section as this tax is included in the single tax regulated by Chapter 1 of the Section X.

(2) Payments for compensation to workers or in their advantage, made by residents of information and technological parks based on the labor law and regulations containing regulations of labor right do not assume the additional income tax liabilities, levied from these payments according to this Section as this tax is included in the single tax regulated by Chapter 1 of the Section X.

(If within tax year the taxpayer applies 3) as the tax regime set in this Section and the specific mode of the taxation set in Chapter 1 of the Section X the taxable income is determined as difference between the amount of the gross income gained during application of the tax regime set in this Section and the size admissible to deduction according to this Section of the expenses incurred during application of the tax regime set in this Section taking into account the features specified in Article 27-1.

Article 15. Tax rates

Total amount of the income tax is determined:

a) for the physical persons, individual entrepreneurs and persons performing professional activity in the sphere of justice and in the field of health care - in the amount of 12 percent of annual leviable earnings;

b) for legal entities - in the amount of 12 percent of the leviable income.

c) for peasant farms - in the amount of 7 percent of the leviable income.

d) for business entities whose income was determined according to Articles 225 and 225-1, - in the amount of 15 percent from excess of the estimated income over the gross income registered in financial accounting by business entity.

Article 15-1. Procedure for determination of the tax liabilities

Determination of the tax liabilities according to provisions of this Section is performed according to the procedure, established by the Government.

Article 15-2. Percentage assignment

(1) the Taxpayer – physical resident person, not having debt on the income tax for the previous tax periods having the right to deduct percentage share in the amount of 2 percent of the income tax amount, transferred annually into the budget, to the receivers specified in part (4).

(2) Percentage assignment is performed since January 1 the year following after tax year for which percentage assignment, before limiting date of term of submission of the declaration on the income tax in the procedure established by the Government is made.

(3) Receivers of percentage assignment are:

a) the public associations, private funds and organizations registered in the Republic of Moldova, performing socially useful activities according to the Law on non-profit organizations No. 86/2020, on condition of implementation of activities by them within at least one year to registration request in the list specified in part (4), and lack of debts to the national public budget for the previous tax periods;

b) the religious cults and their components registered in the Republic of Moldova, performing public moral, cultural or charity, on condition of implementation of activities within at least one year to registration request in the list specified in part (4), and lack of debts to the national public budget for the previous tax periods.

(4) the List of the receivers having the right of participation in percentage assignment is established annually by the Agency of the state services and is published on its official web page till December 31 of year for which assignment, in the procedure established by the Government is made.

(5) the Financial resources received according to the procedure of percentage assignment are used for the purposes established by the current legislation.

(6) the Mechanism of percentage assignment and transfer of percentage allocations to receivers, and also control of use of these amounts is established by the Government.

(7) Receivers of percentage assignment bear responsibility according to the law for non-presentation of reports on use of the amounts received according to the procedure of percentage assignment and for use of these amounts not to destination. The amounts which are not reflected in reports and used not for designated purpose are compensated in the budget.

Article 16. Tax offsettings

The taxpayer has the right to offsetting of the amount withheld and/or previously paid according to provisions of Chapters 12, of 13, 14 and 15 these Sections, except for Articles 90-1 and 91.

Article 17. Income assessment, the owner who remained after death

The income caused by property of the dead is considered as the income of the heir after acceptance of inheritance by him.

Chapter 2 Structure of the income

Article 18. Income sources, taxable

Join in gross income:

a) income from implementation of business activity or professional or other similar activity;

b) income from activities of partnerships gained by members of partnerships and income gained by shareholders/owners of shares (shares) issued by the organizations of collective investment into securities;

c) payment for the performed work and the rendered services (including the salary), the privileges provided by the employer, the fees, commission charges, awards and other similar types of remunerations;

d) income from property leasing;

e) the capital gain determined in part (7) Article 40;

f) It is excluded

f) the income connected with not used reserves according to part (16) Article 24;

f-1) the amount of reduction of discounts for losses on assets and contingent obligations as a result of improvement of their quality during tax period;

f-2) the amount of decrease in the reserves intended for covering of possible losses from non-return of loans, leasing payments and percent accompanying improvement of quality and/or their return during tax period;

g) income gained in the form of percentage charges;

h) royalty (periodical payments);

i) the annuities including received on the basis of international treaties, one of the parties of which is the Republic of Moldova; the insurance sums and compensations received according to insurance contracts and the joint insurances and not used according to Article 22. Exception are stipulated in Item a) Article 20;

j) the income from debt default business entity, except as specified, when insolvency of the taxpayer is the reason of formation of debt;

k) the state grants, awards and prizes which are not determined specially as not taxable in the laws establishing these payments;

l) ceased to be valid;

m)  No. 267 is excluded according to the Law of the Republic of Moldova of 23.12.2011

n) income gained according to the legislation owing to payment of penalty in the form of compensation of the uncollected income, and also owing to deduction or return of deposit;

o) other income which is not specified in the stated above subitems and not being free according to the tax legislation.

Article 19. The privileges provided by the employer

Treat the taxable privileges provided by the employer:

a) the payments performed by the employer for the purpose of compensation of personal expenses of the worker, and also payment for benefit of the worker, performed to other persons, except for payments in the budget of the national social insurance and fees for compulsory national insurance of the payments specified in part (20) Articles 24, and also payments of the expenses on journey, food and professional education of the worker incurred and determined by the employer according to the procedure, established by the Government;

and-1) the cost of coupons on food in part in what it exceeds the deductible nominal value provided by part (1) article 4 of the Law on coupons on food No. 166/2017;

b) the cancelled amount of debt of the worker before the employer;

c) the surcharges performed by the employer to any payment of the worker for housing provided by the employer;

d) the percentage charges received proceeding from positive difference between the weighted average interest rate applied to the new loans granted to physical persons for the term of more than five years (rounded to the following complete percent), established by National Bank of Moldova in November of the year preceding accounting tax year and the interest rate added on the loans granted by the employer to the worker. Provisions of this Item are not applied to the loans granted by banks and non-bank credit institutions to the workers under general conditions on which they grant the loans to the third parties;

e) costs of the employer on provision of property to the worker for use for personal reasons:

- if the property is property of the employer - its costs determined by each object provided for use in the amount of 0,0373 of percent of cost basis for each day of use;

- if the property is not property of the employer - its costs for receipt of property use right for each day of use;

f) Ceased to be valid according to the Law of the Republic of Moldova of 23.12.2011 No. 267

Article 20. Income sources, not taxable

The gross income does not join the following income types:

a) annuities in the form of benefits of social insurance from the budget of the national social insurance and benefits of the public assistance from the government budget provided by the current legislation, including received on the basis of international treaties, one of the parties of which is the Republic of Moldova; the insurance sums and compensations received according to insurance contracts and joint insurances except received in case of forced property exchange according to Article 22;

b) compensations and the lump-sum allowances received according to the legislation in connection with accident or occupational disease by workers or their legitimate heirs;

c) payments, and also other types of compensations due to illness, injury or on other case of temporary disability, performed according to agreements on health care insurance;

d) compensation to workers of the expenses relating to accomplishment of job responsibilities: for the Office of the President of the Republic of Moldova, Parliament and its Device, Government office - in the limits and procedure established respectively by the President of the Republic of Moldova, Parliament and the Government. Compensation to employees of business entities of the expenses connected with accomplishment of service duties, in the limits provided by regulations, and according to the procedure, established by the Government. Compensation to workers of the expenses connected with accomplishment of service duties, in case of excess of the limits provided for accommodation set by the Government;

d-1) expense recovery and the compensation payments connected with accomplishment of service duties by the military personnel, faces of the commanding and ordinary structure of bodies of national defense and law enforcement agencies, the state security agencies and public order at the expense of means of the government budget namely:

- compensation of transportation expenses on journey there and back the customs employees fulfilling the service duties in the settlements other than the place of their accommodation;

- compensation of transportation expenses on journey of the military personnel, faces of the commanding and ordinary structure of bodies of national defense, state security and public order and members of their families, transportation of their personal property in connection with transfer on service, execution of service and dismissal in reserve (in resignation), including the transportation expenses connected with journey on sanatorium treatment, the venue of compulsory leave, and also shipping charges of the military personnel of conscription service and the reservists called on military charges or on mobilization;

- new start allowance;

- lump-sum allowance on initial acquisition;

- the lump-sum allowance paid to graduates of military educational institutions and higher educational institution with the status of special connection;

- monetary compensation of expenses on hiring of housing;

- monetary compensation on acquisition or construction of housing;

- the monetary compensation equivalent to regulations of providing with food and ware allowance, in the amount of, established by the Government;

the amount d-2) received by physical persons and legal entities in compensation of the caused damage or/and the uncollected income in connection with carrying out archaeological researches on the parcels of land which are in property or in ownership of these persons;

the amount d-3) received by physical persons and legal entities in compensation of the damage caused to them as a result of illegal actions (failure to act) or owing to spontaneous or technogenic catastrophes, cataclysms, epidemics, epizooty;

the amount d-4) received by owners or owners of the property confiscated for the benefit of society, for the period requisitions according to the legislation;

d-5) the cash compensation provided from the government budget to beneficiaries of the state program "First house" in the procedure established by the Government;

d-6) the expenses incurred by the employer according to parts (19) - (20) Article 24;

e) the grants to the pupils, students and persons who are getting post-university education or undergoing post-university specialization in the state and private educational institutions according to the legislation on education established by these educational institutions and also the grants provided by charitable organizations, except for payments of teaching or research activities, the lump-sum allowances paid to the young specialists employed in the rural zone according to distribution;

d-7) the annual monetary compensations provided to pedagogical personnel of public educational institutions in the procedure established by the Government;

f) alimony and child allowances;

g) ceased to be valid according to the Law of the Republic of Moldova of 12.04.2015 No. 71

h) address compensations to needy, socially vulnerable segments of the population, and also the benefits of social insurance paid not in the form of annuities;

i) the property received by physical persons - citizens of the Republic of Moldova according to the procedure of donation or inheritance, except for the donations performed according to part (31) Article 90-1;

i-1) the property received by orphanages of family type as donation;

j) the income from non-paid receipt of property, including money, according to the decision of the Government or authorized bodies of local public authority;

k) It is excluded

l) benefits received from charitable organizations - funds and public associations according to provisions of charters of these organizations and the legislation;

m) investments in the capital of business entity and fees for covering of financial losses and equalization of negative net assets, stipulated in Article 55;

n) the income of the diplomatic and other equated to them representations, the organizations of foreign states, the international organizations and their personnel, stipulated in Article 54;

o) the amounts received by the donor from State Healthcare Institutions;

about-1) Ceased to be valid according to the Law of the Republic of Moldova of 23.12.2011 No. 267

p) It is excluded

p-1) prizes in lotteries and/or sports bets in part in what the size of each prize does not exceed one percent of the personal release established in part (1) Articles 33, except for of the prizes received through networks of electronic communications;

p-2) prizes in advertizing campaigns in part in what the size of each prize does not exceed the amount of the personal release established in part (1) Article 33;

q) the money paid in the form of lump-sum allowance or compensation of damage to separate categories of government employees or to their families according to the legislation;

r) the financial support received by physical persons from reserve funds of the Government, bodies of local public authority, fund of social support of the population, and also from means of labor unions according to the provisions providing rendering such help. In case of the financial support provided from means of labor unions, the free limit constitutes the average monthly salary on economy predicted and annually approved by the Government on each worker for year, except for the help provided in case of death and/or disease of the worker or his relatives and cousins-in-laws of the first degree;

s) the financial aid received by athletes and trainers from the International Olympic Committee the awards got by athletes, trainers and technical workers at the international sports competitions, sports grants and the benefits provided to the national teams to teams for preparation and participation in official international competitions;

t) the financial aid received by National Olympic and sports committee, national professional sports federations from the International Olympic Committee, professional European and international sports federations and other international sports organizations;

u) national award of the Republic of Moldova in the field of literature, arts, architecture, science and technology, and also the awards to pupils and their teachers paid in the sizes established by the existing regulations, for the outstanding results achieved at the district, city, municipal, zone, republican, regional and international Olympic Games and tenders;

 u-1) ceased to be valid according to the Law of the Republic of Moldova of 23.04.2020 No. 60

 v) ceased to be valid according to the Law of the Republic of Moldova of 23.12.2011 No. 267

w) remuneration to members of farms (families) for participation in the selective examinations conducted by statistical bodies.

x) income of physical persons gained from activities based on the entrepreneurial patent;

y) income gained by physical persons, except for individual entrepreneurs and peasant farms from delivery of secondary raw materials, including waste and remaining balance of paper and cardboard, rubber, plastic, glass (cullet), ferrous and non-ferrous metals, industrial wastes which are containing metals or their alloys, and also the fulfilled electric accumulators;

y-1) income gained by physical persons, except for individual entrepreneurs and peasant farms from sales of products of crop production and gardening in the natural form and products of livestock production in the natural form, live and lethal weight to other physical person, except for individual entrepreneurs and peasant farms;

y-2) income gained by physical persons, except for individual entrepreneurs and peasant farms from delivery of genuine milk;

y-3) income gained by physical resident persons (citizens of the Republic of Moldova and stateless persons) from alienation of the main housing;

z) income gained as a result of use of tax benefits.

 z-1) Ceased to be valid according to the Law of the Republic of Moldova of 23.12.2011 No. 267

z-2) the money received from special funds and/or the financial resources received in the form of grants according to the programs approved by the Government, used according to their appointment;

z-3) of compensation of moral damage;

z-4) income gained from debt write-off before the national public budget;

z-5) cash allowance of the military personnel of conscription service, pupils and cadets (students) of military educational institutions and higher educational institution with the status of special connection;

z-6) income gained owing to compensation of material damage in part in which the provided compensation does not exceed the caused material damage;

z-7) payment of the guaranteed deposits from Fund of guaranteeing deposits in bank system according to the Law on guaranteeing deposits in bank system No. 575-XV of December 26, 2003;

 z-8) Ceased to be valid since 01.01.2013 according to the Law of the Republic of Moldova of 11.07.2012 No. 178

z-9) income from revaluation of fixed assets and other assets and recovery of losses from their impairment;

z-10) the dividends paid to physical resident persons for tax periods till January 1, 2008.

z-11) the income in the form of royalty of physical persons at the age of 60 years and more in the field of literature, art and science;

z-12) income of legal entities gained as a result of use of external financial sources within the international projects and grants connected with development of education and scientific research;

z-13) income gained by non-profit organizations, religious cults and their components according to the law according to the procedure of percentage assignment;

z-14) income gained in the form of the remuneration for the work performed in the election day paid to members of county electoral councils, members of local electoral bureaus and serving offices of the relevant councils and bureau;

z-15) the payments made by receivers of works on food and transportation of time-workers, in the size established by the Government;

z-16) compensation paid for the account of Fund of compensation to investors according to the Law on the capital market No. 171/2012;

z-17) the income connected with not used reserves which were not subtracted for tax purposes at the time of their education;

z-18) the payments made by the employer for testing of workers for the purpose of detection of the SARS-CoV-2 virus;

z-19) the dividends received by legal resident persons from other legal resident persons, except for dividends from the retained earnings got in tax periods of 2008-2011 inclusive.

Article 21. The special rules relating to the income

(1) Income gained not in cash is estimated by each subject of the taxation and constitutes average price of delivery of goods and/or rendering similar services in the month preceding month in which income not in cash was gained. If in the month preceding month in which income not in cash was gained deliveries of goods were not performed and/or services were not rendered, income gained not in cash cannot be less than cost of the goods and/or services delivered and/or rendered for current month.

(2) In case of receipt of annuity part of any annuity included in annual earnings is subtracted when calculating the leviable income. The deduction is equal to the sum granted by the taxpayer on qualified non-state pension fund and not subtracted from its gross income according to part (2) Articles 66, and also the amount of the insurance premiums brought by the taxpayer - physical person according to insurance contracts and joint insurances, divided on the number of years of expected payments (from the moment of the beginning of payment of annuities).

(3) When implementing foreign currency transactions:

1) In case of calculation of the leviable income the gross income and other receipts, and also the incurred costs in foreign currency are converted into national currency on the official rate of Moldovan leu operating on the date of transaction making.

2) Any debt - both the taxpayer, and to the taxpayer whose amount is expressed in foreign currency except for of the advance payments which are provided/received for acquisition/delivery of assets and services is recalculated on the official rate of Moldovan leu established the last day of tax period.

2-1) If transaction is performed in foreign currency to which the National Bank of Moldova does not quote Moldovan leu, then conversion of currency is carried out in two steps. In the beginning the foreign currency is converted in other foreign currency to which the National Bank of Moldova quotes Moldovan leu. The direct course ratio of these foreign currencies is for this purpose used. The amount received thus in other foreign currency is converted into national currency on the official rate of Moldovan leu.

3) Any the income or loss as a result of recalculation of debt according to Item 2) are considered as income gained or the loss formed in the last day of tax period.

3-1) Transaction date date of reflection on the account statement in bank and/or the payment account, and in other cases – the date specified in source documents according to the method of financial accounting based on provisions of National accounting standards and IFRS is considered.

3-2) If during the time which passed from the date of transaction before settlement date on the arisen debt, the official rate of Moldovan leu changed, there is exchange currency difference. If payment of the amount is made in the same period of tax year in which the transaction is made, the exchange currency difference between the amount which is originally reflected in financial accounting, and settlement amount represents profit or loss of the current year.

3-3) If calculations for the formed debt are not made in the same period of tax year in which the transaction was made, it is revaluated by the taxpayer on the official rate of Moldovan leu the last day of tax year for which the tax declaration is submitted, and the arisen currency difference is considered as profit or loss of the same tax year. Irrespective of possible fluctuations of the official rate of Moldovan leu in the future, for reflection of financial position of the taxpayer for date of creation of balance of the account in foreign currency are reflected in the equivalent amounts in national currency on the official rate of Moldovan leu to foreign currency operating for the corresponding day. As a result of it the difference between the amount specified in accounting records and the amount in which the transaction is reflected in financial accounting during this period or in which it was reflected previous tax year is considered as profit or loss.

(4) the Physical person which is not performing business activity is considered as person who gained income in the amount of the amount of the presented money in part in what total amount exceeds the income during tax period in which donation was performed. Provisions of this part do not extend to persons performing donation to persons who are relatives, cousins-in-laws of the first degree, and also the spouse/spouse.

(5) the Business entity performing donation in the form of things is considered sold the presented thing at the price which represents the maximum size between cost, not depreciable for the purpose of the taxation, and market value at the time of donation.

Article 22. Non-recognition of the income in case of forced loss of property

(1) the income in case of property exchange on property of the same type in case of forced loss is not recognized.

(2) in case of non-recognition of the income according to part (1) the cost basis of replacement property is considered the cost basis of the replaced property increased by the amount of the incurred property purchase costs which is not covered by the income in case of forced loss.

(3) the Property is considered by force lost if it is fully or partially destroyed, stolen if it it is seized or it is intended to demolition or if the taxpayer is forced to leave otherwise it because of threat or inevitability of one of the above-stated actions or events.

(4) the Replacement property is considered as similar if it has the same properties or the nature, as replaced (irrespective of whether it is property of the same level and quality).

(5) the replacement Period - the period which is coming to an end in tax period, the following ambassador of the period in which there was loss.

Chapter 3 Deductions of the expenses connected with business activity

Article 23. General rule

The deduction of personal and family expenses is not allowed, except as specified, for which other is provided in this Section.

Article 24. Deductions of the expenses connected with implementation of business activity

(1) the deduction of the regular and necessary expenses paid or suffered by the taxpayer during tax period only for the purpose of implementation of business activity Is allowed.

(2) If the expenses incurred by the taxpayer consist of the expenses connected with implementation of business activity, and personal expenses, then the deduction only is allowed if the expenses connected with implementation of business activity prevail over personal expenses, and only that part of expenses which directly belong to implementation of business activity.

(3) the Deduction of the expenses connected with sending of workers, entertainment expenses, expenses on insurance of business entities is allowed in the limits set by the Government, except for expenses which are regulated by this Article.

(4) In departure from Article 30 the deduction of the amounts of the taxes and fees paid by the divisions located in administrative and territorial units which budget is not component of the national public budget is allowed.

(4-1) V departure from provisions of this Article and Article 26-1 deduction of depreciation and expenses on maintenance, operation and repair of the cars used by persons specified in compound groups 112 and 121 of the Qualifier of the occupations of the Republic of Moldova subtracted according to this Section are allowed only on one car on each person specified in compound groups 112 and 121 of the Qualifier of occupations of the Republic of Moldova and only for the purpose of business activity.

(5) Voided according to the Law of the Republic of Moldova of 23.12.2011 No. 267

(6) the deduction of the amounts paid for acquisition of property on which depreciation is charged and to which Articles 26-1, 28 and 29 are applied is not allowed.

(7) the deduction of compensations, remunerations, percentage charges, the hire charges of property and other expenses made for the benefit of the member of the family of the taxpayer, the official or the head of business entity, the copartner or other affiliated person is not allowed if there are no proofs of admissibility of payment of such amount.

(8) the deduction of losses from realization or exchange of property, performance of works and rendering services (directly or indirectly is not allowed) affiliated persons each other. For the purposes of this part losses represent the difference between the annual amount of cost of sales and annual income amount from sales reflected in financial accounting for all tax period in the relations with the affiliated person. Provisions of this part do not extend to the relations between members of the same cooperative or the same group of agricultural producers, and also to the relations of cooperative or group of agricultural producers with their members.

(9) the deduction of the costs connected with income acquisition is not allowed, exempted from the taxation.

(10) the deduction of not documented regular and necessary expenses incurred by the taxpayer during tax period in the amount of 0,2 of percent of the leviable income Is allowed.

(11) the deduction of the amounts paid or the expenses incurred for benefit of owners of the entrepreneurial patent and/or for benefit of the physical persons performing independent activities according to Chapter 10-2 is not allowed.

(12) the deduction of payments for above-standard emission of pollutants in the environment and for superlimit consumption of natural resources is not allowed.

(13) the Deduction of remaining balance, waste and natural wastage is allowed in the limits which are annually approved by heads of the companies, but without excess of the limits set by the Ministry of Agriculture, regional development and the environment for tobacco products of goods items 240210000, of 240220, of 240290000, 2403 and products of ethyl alcohol of goods items 2207, of 2208, and also the limits set by the Ministry of Economy and Infrastructure for oil products.

(14) the deduction of the expenses connected with voluntary conveyance of property according to the decision of the Government or authorized bodies of local public authority Is allowed.

(15) the deduction of the expenses paid by the taxpayer during tax period in the form of the admission and membership fees connected with activities of the patronages, funds and other associations representing business activity Is allowed. The limit of deduction of these expenses constitutes 0,15 of percent of the salary fund.

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