Moldova draft law signals plan to tax digital sales from non-residents

Moldova is the latest in a growing number of tax jurisdictions revising tax rules on cross-border sales by digital businesses to domestic customers.

Dec 4, 2019

Moldova is the latest in a burgeoning number of tax jurisdictions that are revising rules to tax the cross-border sales by digital businesses. Draft plans state that the new rules may come into effect on January 1, 2020.

Moldova following a global trend

The Eastern European state follows in the path of plans in Singapore and Malaysia (where rules change on January 1, 2020); Uzbekistan (change also planned January 1, 2020); Mexico (June 1, 2020), and Vietnam (July 1, 2020).

This tax reform is one of the first significant moves of a Moldovan government under new prime minister Ion Chicu. Mr Chicu was officially approved as prime minister by parliament on November 14.

The global approach shows no signs of easing off with numerous other taxing jurisdictions in Kazakhstan, Indonesia, Ecuador, and Paraguay all assessing plans to extend VAT/GST rules to such cross-border digital sales.

No threshold to registration

With regard to Moldova, the draft plan that is about to go before parliament will apply 20% VAT on these cross-border digital sales.

The draft plan states that affected businesses, as they do elsewhere, will have to register with the Moldovan tax authorities. It also reveals the introduction of a simplified registration system. These digital businesses will need to register so that they can collect and remit the tax collected on their sales to Moldovan-based customers.

Taxamo’s information at the time of writing is that there will be no threshold to registration. This means that affected businesses would have to apply Moldova VAT to all of their digital sales to Moldova-based customers.

Early Moldovan estimates are that the move could result in an extra €5 million for its treasury.

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