LAW OF THE REPUBLIC OF MOLDOVA

of December 16, 2016 No. 281

About modification and amendments in some legal acts

The Parliament adopts this organic law.

Art. I. – In the Tax code No. 1163-XIII of April 24, 1997 (repeated publication: The official monitor of the Republic of Moldova, special release of February 8, 2007), with subsequent changes and amendments to make the following changes and additions:

1. In all text of the code of the word "The Main State Tax Authorities Under the Ministry of Finance", "Main State Tax Authorities", "State Tax Authorities", "territorial state tax authorities", "Territorial State Tax Authorities", "specialized state tax authorities", "territorial tax authority", "tax authority" and "Tax authority" shall be replaced with words State Tax Administration in the corresponding case, except as specified, when this law provides other.

2. In part (Article 1 of the word of "tax authorities" to replace 1) in both cases with words of State Tax Administration, and the word "their" – the word "its".

3. Add Article 4 with part (3) the following content:

"(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.".

4. In Article 5:

9) to declare Item invalid;

in the subitem b) Item 18) change concerns only the text in state language;

in Item 26) to "tax authorities" shall be replaced with words words to State Tax Administration, and the words "tax authorities have the right" – the words "The State Tax Service Has the Right";

in Item 36) the word of "lawyers" to exclude, and at the end to add Item with the offer: "Provisions of this Item do not extend to persons specified in Item 362).";

add Article with Items 36-1), 36-2), 45) and 46) of the following content:

"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 field 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, the translator / the simultaneous interpreter.";

"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.".

5. In Article 8:

in part (1):

in Item a) shall be replaced with words words of "territorial state tax authorities" State Tax Administration;

add part with the Item e-1) of the following content:

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

in part (2):

in Item b) shall be replaced with words the words "in tax authority" "in division of the State Tax Administration", and the words "in the relevant tax authority" – the words "in the relevant division of the State Tax Administration";

in Item c) changes concern only the text in state language;

in Item f) change concerns only the text in state language;

add part with the Item f-1) of the following content:

"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;";

in Item i) "tax authorities" shall be replaced with words words State Tax Administration.

6. In part (Article 11 of the word "Tax Authorities Prepare" shall be replaced with words 3) "The State Tax Service prepares", and words of "tax authorities" – words of State Tax Administration.

7. In Article 12:

1) to add Item with the paragraph:

"For the purposes of this concept do not constitute royalty:

a) payments in case of complete acquisition of any property or any property right to all above-mentioned elements;

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.";

14) to add Item with the text: "For the purpose of application of this concept the prize from gamblings in casino or in gaming machines 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.".

8. Add Article 12-1 with parts (4) – (6) the following content:

"(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 72 of this Section.".

9. In part (1) Article 13:

Item and) to state in the following edition:

"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 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;";

add part with the Item b-1) of the following content:

"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;".

10. In Article 14:

in part (1):

Item and) to state in the following edition:

"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 minus deductions and releases to which they have the right;";

add part with the Item b-1) of the following content:

"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;";

in part (3) after the words "specified in" to add part with words "Chapters 10-1 and 10-2 and", and shall be replaced with words the words "and (3-5)" ", (3-5) and (3-6)".

11. In Article 15:

in Item a) to replace figures "29640" in both cases with figures "31140";

in Item d) change concerns only the text in state language.

12. In Article 18:

in Item b) to exclude the words "according to Chapter 9 provisions";

in Item e) words "parts (7) Article 37;" shall be replaced with words "parts (6) Article 40;";

in the Items f-1) and f-2) of the word "tax year;" shall be replaced with words "tax period;".

13. In Article 20:

Item m) after words of "business entity" to add with the words "and fees for covering of financial losses and equalization of negative net assets";

in the Item p-1) of the word "and/or lotteries" shall be replaced with words ", and/or lotteries, and/or sports bets";

add Article with the Item y-3) of the following content:

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

14. In Article 21:

in part (3):

in Items 2) and 3) words of "tax year". shall be replaced with words "tax period".;

state Item 3-1) in the following edition:

"3-1) Transaction date date of reflection on the account statement in bank, 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.";

part (to state 4) in the following edition:

"(4) the Face performing donation in the form of money is considered as person who gained income in the amount of the amount of the presented money excepting the amount presented by the physical person which is not performing business activity during tax period in part in what total amount does not exceed the leviable income gained during accounting tax period. Provisions of this part do not extend to persons performing donation to persons who are relatives or cousins-in-laws of the first degree.".

15. In part (5) Article 22 of the word "in tax year, the following ambassador of year", shall be replaced with words "in tax period, the following ambassador of the period,".

16. In Article 24:

in parts (1) and (words of "tax year" shall be replaced with words 10) "tax period";

part (to add 11) with the words "and/or for benefit of the physical persons performing independent activities according to Chapter 10-2.";

in part (words of "tax year" shall be replaced with words 15) "tax period";

part (15-1) to state in the following edition:

"(15-1) the deduction of the expenses incurred by the taxpayer during tax period provided in the business plan or expense budget for the purposes pledged in the collective agreement Is allowed. The limit of deduction of these expenses constitutes 0,15 of percent of the salary fund.";

in part (the words "in reporting year" shall be replaced with words 16) "in accounting tax period".

17. In part (Article 25 of the word "in tax year." shall be replaced with words 3) "in tax period.".

18. In part (Article 26 of the word "in tax year" shall be replaced with words 3) "in tax period".

19. In Article 27:

in parts (5) and (words of "tax year" shall be replaced with words 6) "tax period";

in part (8):

in Item a) the words "in tax year" shall be replaced with words "in tax period", words of "this tax year" – words of "this tax period", and the words "in this year;" – the words "in this tax period;";

in Item b) shall be replaced with words the words "in tax year" "in tax period";

in Item b) parts (the words "and for the international air vehicle-in the amount of 100%." shall be replaced with words 9) "and in case of the expenses connected with repair of the international air vehicle – in the amount of 100 percent of the estimated payment amount of operational leasing brought during tax period.", and the word "operational" – the word "operational";

in Items a) and b) parts (10) change concerns only the text in state language.

20. In part (Article 29 of the word of "tax year" shall be replaced with words 3) "tax period".

21. In Article 32:

in part (the words "in tax year" shall be replaced with words 1) "in tax period", the words "in this year", – the words "in this tax period", and the words "for five next years." – the words "on five subsequent tax periods.";

in part (2) word "on any of the tax years following after year", shall be replaced with words "on one of the tax periods following the period,", and the words "from four next years." – the words "from four subsequent tax periods.";

in part (3) words "one year," shall be replaced with words "one tax period,".

22. In Article 33:

in part (figures "10128" to replace 1) with figures "10620";

in part (2):

in the prolog of figure "15060" to replace with figures "15840";

in Item e) words "persons with limited opportunities since the childhood," shall be replaced with words "persons with limited opportunities owing to inborn disease or disease since the childhood,".

23. In Article 34:

in part (figures "10128" to replace 1) with figures "10620";

in part (figures "15060" to replace 2) with figures "15840".

24. In Article 35:

part (to state 1) in the following edition:

"(1) release on each dependent in the amount of 2340 lei a year, except for persons with limited opportunities owing to inborn disease or disease since the childhood on which release constitutes 10620 lei a year is provided to the Taxpayer (physical resident person).";

in part (2):

in Item a) words "persons with limited opportunities since the childhood" shall be replaced with words "faces with limited opportunities owing to inborn disease or disease since the childhood";

in Item b) to replace figures "10128" with figures "10620";

in part (4) "is given the floor" to replace with the word "is applied".

25. In Article 36:

in part (words of "tax year" shall be replaced with words 1) "tax period";

in part (the words "and Article 53-3" to exclude 2);

in Item a) parts (4), parts (5) and (words of "tax year" shall be replaced with words 7) "tax period".

26. State Chapter 5 in the following edition:

"Chapter 5. Surplus and loss of the capital

Article 37. Subjects of surplus or loss of the capital

Provisions of this Chapter are applied to all taxpayers (whether it be physical persons or legal entities) – to residents and nonresidents of the Republic of Moldova who sell, capital assets exchange or alienate them otherwise.

Article 38. Scope

This head establishes procedure for determination of surplus amount of the capital for the purpose of the taxation from sale, exchange of capital assets or alienation of their different way.

Article 39. Capital assets

(1) Capital assets are:

a) shares, bonds and other documents certifying the property right in business activity;

b) the private property which is not used in business activity;

c) earth;

d) purchase option or sale of capital assets.

(2) the Surplus or loss of the capital is not recognized case of redistribution (transfer) of property between spouses or between the former spouses if such redistribution (transfer) follows from need of the Section of common property in case of divorce.

Article 40. Determination of surplus or loss of the capital

(1) the Size of surplus or loss of the capital from sale, exchange of capital assets or alienation of their different way is equal to difference between the received amount (the gained income) and cost basis of these assets.

(2) the Amount received from sale of exchange of capital assets or alienation of their different way is equal to the cash amount or the capital asset value estimated at the market price received in the form other than cash.

(3) the Size of surplus or loss of the capital from stock trading at the exchange through the broker / investment company is determined based on the report of the investment company broker according to the procedure, established by the Ministry of Finance.

(4) Person who presented any gift is considered as person who sold the property presented to them at the price which is the largest size from the corrected cost basis of property or its market price of the donation moment.

(5) the Surplus or loss of the capital is not recognized for tax purposes case of creation of the gift agreement between relatives of the first degree of relationship, and also between spouses.

(6) the Surplus or loss of the capital from sale, exchange of the main housing or alienation of its different way is not recognized for tax purposes.

(7) the capital Surplus amount is equal in tax period to 50 percent of the amount exceeding acknowledged capital gain over any its losses suffered during tax period.

Article 41. Restrictions for deductions of losses of the capital

(1) deductions of losses of the capital only within its surplus are permited the Taxpayer (whether it be physical person or legal entity).

(2) Losses of the capital of business entities which deduction is not resolved based on part (1) in this tax period, are considered as the losses of the capital suffered in the following tax period.

Article 42. Cost basis of capital assets

(1) Cost the basis of capital assets is documented according to the procedure, established by the Ministry of Finance, and constitutes:

a) the cost of the acquired capital assets;

b) the cost of the capital assets created by the taxpayer. In the absence of the documents confirming real estate value, created by own efforts physical by person which is not performing business activity cost basis the market value estimated by cadastral bodies makes;

c) asset cost (for date of acquisition of property right), received owing to redistribution (transfer) of joint property between spouses or between the former spouses if such redistribution (transfer) follows from need of the Section of common property in case of divorce;

d) market value of the capital assets (for date of acquisition of property right) received according to the procedure of inheritance, donation or based on the agreement of the perpetual maintenance;

e) market value of the capital assets (for date of acquisition of property right) received in case of exchange;

f) the cost of the privatized capital assets;

g) zero in case of the capital assets received gratuitously and also in the absence of documentary confirmation of cost basis.

(2) Cost the basis of shares does not increase by the amount of dividends in the form of shares which do not change share of participation of shareholders in the capital of business entity at all and which were distributed in tax periods for 2009 inclusive.

(3) Cost the basis of the shares acquired till January 1, 1998 is determined proceeding from the cost of one share for December 31, 1997 which is determined as ratio of the authorized capital and total quantity of issued shares.

(4) the basis of capital assets Corrected cost is cost basis of capital assets:

a) reduced by the size of depreciation, depletion or other changes in value of capital assets which is charged off the fixed asset account;

b) increased by the cost of recovery and other changes in value of capital assets which is charged into the fixed asset account.

(5) Reduction and increase in cost basis of capital assets, taking place till January 1, 1998, are made according to the regulations existing before this date.

(6) Cost the basis of capital assets is adjusted on the positive difference received as a result of the revaluation of the capital which is carried out according to Chapter IV of the Law No. 1164-XIII of April 24, 1997 on enforcement of Sections I and II of the Tax code.".

27. In Article 44:

in part (3):

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