Moldova: Common tax of 7 percent for investors in the IT-Sector

published on March 9, 2018

At the end of December 2017, the Government of the Republic of Moldova approved the Decision No. 1144, dated 20.12.2017. The aim of the Decision was to approve the establishment of the information technology park "Moldova IT Park" and to implement the Law on Information Technology Parks. In the first two months of 2018 more than 50 member residents of the Moldova IT Park have been registered.
 

   

The Law on Information Technology (IT) Parks is enforceable from 1 January 2017 and regulates the procedure and tools for registration of the member residents of the information technology parks ("IT Parks") as well as tax incentives to which member residents are entitled.

A legal novelty for the Republic of Moldova is implementation of a new taxation approach to member residents of IT Parks. All residents will only be taxed with a single uniform tax of 7%.

According to the law, the IT Park residents are entitled generally to carry on the following eight types of business activities within the framework of development programs:

• Computer programming activities;
• Publishing of computer games;
• Other software publishing (this class includes: publishing of ready-made (non-customized) software, including translation or adaptation of non-customized software for a particular market);
• Computer facilities management;
• Data processing, hosting and related activities;
• Web portals;
• Computer consultancy activities;
• Other information technology and computer service activities

  
To obtain the status of an IT Park resident, the applicant would have to conclude at least a four-year contract with the IT Park management. As a result, IT Park residents will become entitled to pay a single uniform tax which covers all of the following:

• Corporate income tax;
• Withholding tax on payroll paid to the personnel;
• Mandatory social security charges;
• Mandatory medical insurance charges;
• Local taxes;
• Real estate tax;
• Motorway tax on vehicles registered in the Republic of Moldova.

The uniform tax of 7% will be accrued and payable monthly on the basis of the revenue from sales of the concerned IT Park resident member; however the amount of tax payable cannot be less than the minimum threshold amount per employee. The minimum uniform tax amount payable per employee by the IT Park residents will be computed monthly as 30% of the nationwide average salary.

The Government has approved the amendment of six tax normative acts, as well as mandatory social and medical charges, in order to bring them in line with the provisions of the Law on IT Park.

According to the IT Park Regulation, the status of the IT Park resident  may obtained by any legal or natural person who is registered in the Republic of Moldova as subject of the entrepreneurial activity and which carries out or  intends to carry out as main business activity one or more types of business activities indicated above. According to the IT Park Law the main business activity is the activity that generates 70% or more of the revenue from sales of the concerned IT Park resident member.

An additional advantage is that IT Park offers a "virtual operating" regime, and residents are able to perform their business activity and benefit of the described tax incentives, even from their own offices or residences, after their proper registration.