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Economic Description
Moldova is a small lower-middle-income economy. Although it is among the poorest countries in Europe, it has made significant progress in reducing poverty and promoting inclusive growth since the early 2000s.
The economy has expanded by an average of 5 percent annually, driven by consumption and fueled by remittances. The latter account for a quarter of GDP, among the highest shares in the world.
European integration has anchored successive governments' policy reform agendas, but reforms that are good on paper have yet to materialize. A vulnerable political system, polarized society, adverse external environment, and skills mismatch in the labor market, along with climate-related shocks, are Moldova’s biggest economic challenges.
Continued economic stabilization, the advancement of key economic reforms, and the creation of a rulebased environment for businesses are the country’s key goals. Moldova’s large-scale out-migration, combined with decreasing fertility rates, has led to an alarming decline in the population and increased the share of elderly people. This puts pressure on the pension system and limits the country’s long-term competitiveness.
In the near term, the formation of a new government supported by a parliamentary majority established in June 2019 is an opportunity to regain trust among citizens and international partners, strengthen the political system, de-polarize society, combat corruption, and speed up the reforms.
The Republic of Moldova is a location that is yet to be discovered as a business destination and an option that suits the needs of entrepreneurs. But it has plenty of advantages concerning company establishment and management, some of them being: low taxes compared to the rest of the countries in Europe, developed banking system, working flexibility of state institutions, online accounting reporting and the use of electronic signatures. Another benefit of setting up a company in the Republic of Moldova is that your involvement in the process can be minimal, as we at Bizonaire offer you personalized solutions that will fit your personal needs.
How do you register a Company in Moldova? 3 easy steps!
1st step
First things first, you have to decide what is the type of activity that your company will undertake so that we can provide advice on the most appropriate entity for your needs. Below, we present some basic information regarding the most popular types of companies. But for a more in depth analysis you can read one of our previous articles on this subject.
A Limited Liability Company is formed by one or more individuals through a written agreement that includes provisions for management, assignability of interests, and distribution of profits and losses. It’s suitable for most trading businesses, it can operate anywhere in the world and can undertake almost any nature of activity other than banking or insurance.
A Joint Stock Company is necessary if the firm is planning to trade its shares to the public. It can operate anywhere in the world and is suitable for any nature of business, but it requires a high initial capital requirement.
A Sole Proprietorship Company is one individual or married couple in business alone. They are the most common form of business structure, it being easy to form and operate and flexible to manage, facing fewer legal controls and fewer taxes. However, the business owner is personally liable for all debts incurred by the business.
Also, at this stage you have to pick the name of your company. This is both an exciting and also very important step, as the name of an enterprise is in most cases correlated to its success. The right name can make your company the talk of the town and the wrong one can doom it to failure. Ideally, your name should convey the expertise, value and uniqueness of the product or the service you offer.
2nd step
The next step does not require your involvement at all, just provide us with a copy of your Passport (if you are a foreign citizen) or Identity Card (if you are a citizen of Republic of Moldova). We are going to take care of all the needed documents and permits such as: Notification from the National Commission for the Financial Market for insurance agencies, social and pension funds and credit organizations, Decision on the establishment of a legal entity and its constituent documents, confirmation of payment of registration tax and others. Subsequently, we will apply on your behalf for the registration of the company at the Public Services Agency, giving you the opportunity to avoid the lines and the bureaucratic aspect.
3rd step
The last step consists of signing the company formation documents and receiving your newly registered firm’s document package. This is the only involvement required from you, as it is compulsory that you sign the papers yourself. You will be accompanied by our representatives to the Public Services Agency where you are going to sign the documents, for foreign citizens this procedure is preceded by a visit to the notary where a translator will present all the information included in the documents. We can also arrange transportation and accommodation for you, making sure your trip to Moldova is a productive and pleasant experience.
At Bizonaire, we aim to provide you a hassle-free experience regarding every aspect of your business. You name it and we have a solution to make it easier and more productive. We are all about efficiency and optimization without compromising the results. Embark on a business journey with us and we assure that you can forget about many stressful aspects that running a business implies.
Moldovan residents (both Moldovan citizens and foreigners) are subject to taxation for their income received during the fiscal period from any sources within the Republic of Moldova, as well as from sources outside the country for their work activity effectively performed in the Republic of Moldova (except income that is expressly tax exempt under the Moldovan law).
Moldovan citizens receiving investment and financial income from sources outside Moldova are also subject to tax on this income in Moldova.At the same time, individuals qualifying as non-residents for Moldovan PIT purposes are subject to Moldovan tax for the income derived from Moldovan sources (e.g. income received from property located in Moldova, remuneration for activity performed in Moldova, interest and royalties received from Moldovan legal entities).
Personal income tax rates
For residents (standard taxation) 12%:
For non-residents:
Corporate - Taxes on corporate income
Resident companies generally must calculate their taxable base for CIT purposes on their worldwide income. Permanent establishments (PEs), unlike resident companies, are only required to calculate their taxable base for CIT purposes on income sourced in Moldova.
The CIT rate is 12%. If the Moldovan Tax Authority (MTA), applying indirect methods, re-assesses the income amount compared to the declared gross income, a 15% CIT rate may be applied to the excess amount.Individual entrepreneurs are subject to a 12% CIT rate on their total income.Farming enterprises are subject to a 7% CIT rate. Small and medium companies that are not registered as VAT payers and correspond to specific criteria may opt for a special CIT regime of 4% on their turnover.
