They have appealed to the government and parliament to negotiate with the European Commission for a 6-year transition period for the implementation of the global minimum tax rules (Pillar II) set forth in EU Directive 2022/2523.
The authors of the letter support the harmonization of tax legislation with EU standards, but believe that the immediate application of the new rules would create an excessive burden with minimal tax revenue.
This is especially true given that Moldova intends to undertake tax reform and continues to feel the effects of the war in Ukraine, and therefore needs to strengthen its administrative capacity to implement such complex mechanisms.
Association members point out that Article 50 of the EU Directive allows small countries with a limited number of large multinational groups to defer the application of key rules such as the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR). Estonia, Latvia, Lithuania, Malta, and Slovakia have taken advantage of this option.
Moldova is in a similar situation. The country has no parent companies (Ultimate Parent Entities) subject to the directive, and the number of local subsidiaries of large multinational groups totals approximately 50.
And maintaining the taxregime for the IT Park
In this context, the Moldova IT Park is singled out. Applying the directive without a transition period could jeopardize the special tax regime for its residents—which is guaranteed until 2035—reduce the sector’s investment appeal, and undermine investor confidence in government guarantees.
Furthermore, it is unclear how the current flat tax in the IT Park should be taken into account when calculating the effective tax rate under the GloBE rules.
The appeal emphasizes that the implementation of Pillar II will require the creation of new IT infrastructure, the modernization of tax administration systems, the training of specialists, international data exchange, and the adaptation of corporate reporting. For the limited number of companies potentially affected by the new rules, such costs are, in the business community’s view, disproportionate to the expected budget revenues.
In this regard, the business community proposes that Moldova’s official position in negotiations with the European Commission be to request a transition period for the country, with a six-year deferral of the application of the new standards. At the same time, Moldova would maintain its commitment to transpose the directive into national law, develop the necessary administrative infrastructure, and implement the global minimum tax mechanism after the transition period ends.
