VAT

1. The Economic Essence of the VAT

Value added tax (hereinafter called VAT) – a general state tax representing a form of payment to the budget of a portion of the value of goods supplied and services provided subject to taxation on the territory of Republic of Moldova, as well as of a portion of the value of all taxable goods and services imported into Republic of Moldova.

Goods, tangibles – are the products of labor in the form of items, consumables and products for technical and economic purposes, buildings, constructions and other real estate property, intangible assets.

Supply of goods – the transfer of ownership rights on goods through sale, exchange, gratuitous transfer, transfer with partial payment, in-kind wage payment, other in-kind payments, and sale of pledged goods on behalf of the holder of collateral, transfer of goods on the grounds of financial leasing contract transmission of goods by the principal to the broker, by the broker to the buyer, by the supplier to the broker and by the broker to the principal within the implementation of the commission contract;

Supply (provision) of services – provision of tangible and intangible consumption and production services, including renting property, location, life interest, operational leasing, transfer of rights to use any goods against payment, partial payment or free of charge; construction and assembly activities, repairs, scientific research and development, experimental and design works, and other types of works done against payment, partial payment or free of charge service provision activity by the fiduciary administrator to the buyer and by the fiduciary administrator to the founder trustee within the performance of fiduciary administration contract. Services provided by the fiduciary administrator to the buyer within the fiduciary administration contract are considered performed delivery by the founder trustee to buyer.

Partial payment – the incomplete fulfillment by the buyer of his/her obligations toward the supplier.

Taxable supply – supply of goods, provision of services, other than supply of services and goods that are exempt from VAT, by a subject of taxation as part of entrepreneurial activity.

Goods for personal use or consumption – items used to meet the needs of the owner and /or members of his/her family.

Import of goods – bringing in goods on the territory of the Republic of Moldova in accordance with customs legislation.

Import of services – services provided by the non-resident legal and physical entities in Republic of Moldova to resident or non-resident legal and physical entities of Republic of Moldova, where the place of rendering services is considered Republic of Moldova.

Export of goods – taking out goods from the territory of the Republic of Moldova in accordance with customs legislation.

Export of services – services provided by legal and physical entities residents of Republic of Moldova to legal and physical entities non-residents of Republic of Moldova outside the territory of Republic of Moldova.

Specific relations – special relations inherent and applied only to a certain subject or circumstance different from relations with similar subjects or circumstances.

Zero Rate – a VAT rate of zero percent.

Agent – a person who acts on behalf of another person, but is not his/her employee.

Place of delivery of goods, services – place where delivery is made according to rules provided in tax code.

Fiscal invoice – a standard form of primary document with special regime, submitted to the buyer by the taxable subject, registered in due order upon carrying out taxable deliveries.

Following are the subjects of VAT taxation:

• legal and physical entities registered or have to be registered in accordance with tax code;

• legal and physical entities importing goods, except physical entities who import goods for personal use or consumption, the value of which does not exceed the ceiling stipulated by current legislation;

• legal and physical entities importing services whether or not they are registered in accordance tax code.

Following are the objects of VAT taxation:

• delivery of goods and services by subjects of taxation representing the outcome of their business activity in Republic of Moldova;

• imports of goods and services into the Republic of Moldova, except goods imported by physical entities for personal use or consumption, the value of which does not exceed the ceiling stipulated by current legislation.

• imported services in Moldova