Sergey Temrin, Director of Concept Audit Company
Digital platform businesses have grown dramatically in recent years. The main driver of their growth is the network effect. A classic business process scales supply: the greater the volume of production, the lower the unit costs. A platform scales demand: the more participants, the more efficient the transactions.
In the context of general digitalization, the so-called gig-economy is rapidly developing, and platform employment is becoming a part of it. The gig-economy is an economy of free income, characterized by the spread of part-time employment. The classic employer-employee model is undergoing significant changes. The digital economy positions itself as an intermediary between the customer and the consumer of services. “We see Glovo couriers on the streets of Chisinau every day,” comments Serghei Temrin, Doctor of Economics, director of the auditing company Concept. – Who are they: employees or self-employed? Or, perhaps, workers using the new regime developed for so-called freelancers?”.
The development of this form of labor activity is on the horizon. It is certain to continue its growth in the coming years, creating new challenges for tax regulation. And it is quite difficult. Some of the self-employed use various platforms that act as intermediaries to help them find orders. Their use in the labor market has both advantages and disadvantages. Employees of such platforms allow them to freely choose their schedule and amount of work. However, for the economy as a whole, they can increase the risk of under-receipt of taxes.
At the same time, solving the problems of taxation of self-employed workers in the gig economy should not lead to undesirable consequences for the economy as a whole. Increased tax burden may repel both employees and employers and lead to a decrease in competitiveness in the labor market, experts warn.
Currently, self-employment in the gig economy is one of the most dynamic forms of employment. It represents an important element of the economic system. But tax regulation of the self-employed remains an urgent problem, which states are trying to solve in various ways.
Some countries introduce special tax regimes to reduce the tax burden. Others adopt laws that oblige platforms to withhold taxes from income. But even in the presence of special tax regimes and laws, the problem of taxation of the self-employed cannot be completely solved, as such workers often carry out their activities on several platforms, receive income in different currencies, and may move to other countries, complicating the control and accounting of their income.
To offset these complexities in calculating and paying taxes on income from different sources, some countries allow online platforms to withhold taxes directly from the earned income of self-employed workers. Upon completion of each transaction or payment for a service through the platform, a certain percentage is automatically withheld as tax and remitted to the tax authority. Thus, even if a self-employed person earns income from different platforms, this greatly simplifies the tax payment process.
Serghei Temrin, Director of Concept Audit Company: “In Moldova, tax rules have not kept pace with the changes in the digital economy. Part (1) of Article 88 (5) of the Tax Code leaves almost no alternative for it: “Every employer who makes salary payments to an employee (including bonuses and benefits granted) shall, taking into account the exemptions and deductions claimed by the employee, be obliged to calculate and withhold from these payments a tax determined in the manner prescribed by the government. The employer is not obligated to follow up on the loss of the right to use the personal exemption.” In other words, the government seeks to close loopholes by any means necessary to treat an individual as an “independent contractor” (remember, there used to be such a term in the TC) rather than an “employee for hire.” All this is connected with social payments paid from wages.
– At the same time, Moldova has committed to implement the EU Directive 2024/2831 on improving labor conditions for citizens working through digital platforms. This will require serious changes in labor and tax legislation. And the main problem arising in this regard is the legal status of a digital platform employee. Therefore, given the importance of the issue related to the social security of citizens, I would like to wish the developers of this status not to use the policy of “first we get into the fight, and then we’ll figure it out”, as it sometimes happens in our country. Since, on the one hand, this issue concerns labor law and social security system, and on the other hand, there is a tax and legal problem. The tax burden of many subjects of the tax system depends on the determination of the status of such an employee. Therefore, first of all, Moldova needs a deep and clear elaboration of the problems related to the implementation of this Directive”.
