the correct application of certain provisions of the Tax Code

related amendments introduced by Law No.71 of 12/04/2015


Posted: 01/29/2016
in the Official Gazette

Nr. 20-24
Article No: 88

Based on the amendments to the Tax Code No. 1163-XIII from 24.04.1997 by the Law amending and supplementing certain acts No. 71 of 12.04.2015 (Official Gazette, nr.102-104 / 170 of 28.04. 2015), the Ministry of Finance presents for knowledge and guide the daily activity following.
I. Nr.7l by Law of 12.04.2015, starting on 05.01.2015, the Tax Code were amended and introduced new provisions regarding the deduction for tax purposes of expenses related to business activity, namely:
- deducting depreciation and costs for maintenance, operation and repair of vehicles used by persons specified in minor groups 112 and 121 of the Classifier of occupations in Republic of Moldova;
- Annual expenses incurred by the employer deducting premiums for voluntary health insurance the employee;
- Deduction for losses on assets and conditional commitments;
- Deduct donations made during the fiscal year for philanthropy and sponsorship.
Just by nr.7l Law of 04.12.2015, starting on 01.05.2015, the Tax Code provisions have been introduced on limiting transition into account the amount of VAT paid or to be paid for maintenance operation and repair of vehicles used by persons specified in minor groups 112 and 121 of the Classification of occupations in Moldova.
Also mentioned that according to the Tax Code:
- tax procedure shall apply during and at the application, unless the law provides otherwise (Art. 3 paragraph (41));
- Tax on income tax during the calendar year is the end that determines the taxable income and calculate the amount of tax to be paid (Article 121 para. (1));
- Legal entities use accrual accounting, tax records, and for individuals who run businesses - cash accounting and accrual accounting (art. 44 (1));
- VAT tax period is a calendar month, starting from the first day of the month (article 114 para. (1)).
Thus, in determining tax liabilities on income tax for the fiscal period of 2015, businesses will apply tax provisions in force on ending the tax on income, except when the law provides otherwise.
Accordingly, the Fiscal Code for tax purposes the deduction of expenses related to entrepreneurial activity mentioned above, the wording of Law No. 71 of 04.12.2015, extends over the entire period of fiscal year 2015. However
provisions tax Code on limiting passage into account the amount of VAT paid or to be paid for the maintenance, operation and repair of vehicles used by persons specified in groups minor 112 and 121 of the Classification of occupations in Moldova apply from 01.05. 2015 - VAT tax period in which Law No. 71 of 04.12.2015 entered into force.
The following is the peculiarities of the rules specified.
1. On rules for deducting expenses and passing into account the amount of VAT for the maintenance, operation and repair of vehicles used by persons specified in 112 minor groups and 121 occupations in Moldova Classifier
According to the Tax Code (in the wording of Law no. 71 of 12.04.2015):
• subdivision is the structural unit of the enterprise, institution, organization (branch, representative office, branch, department, store, warehouse etc.) lying outside her place of residence base, which carries some of its powers (Article 5 pct.29));
• notwithstanding the provisions of this Article, Articles 26 and 27, deduction and depreciation expenses for the maintenance, operation and repair of vehicles used by persons specified in minor groups 112 and 121 of the Classification of Occupations in Moldova, deductible under this Title it is allowed only for one car per subdivision of the entity, including its head office (Article 24 para. (41));

• VAT amount paid or to be paid for the maintenance, operation and repair of vehicles used by persons specified in minor groups 112 and 121 of the Classification of Occupations in Moldova passing account for only one car for each subdivision of the entity, including its head office. The VAT amount paid or to be paid for the maintenance, operation and repair of more than one vehicle used by persons specified in groups minor 112 and 121 of the Classification of Occupations in Moldova is not going to account and refers to consumption or expenses (102 para. (11)).
Also, according to the Classification of Occupations in Moldova, approved by Order Ministry of Labour, Social Protection and Family No. 22 of 03.03.2014, specified categories of staff to minor groups 112 and 121 include:






MAJOR GROUPS


sub
GROUPS


GROUPS MINOR


GROUPS BASIC


NAME





1











Legislators, members of the executive, other dignitaries and senior public administration, managers and senior officials from the drive










112





CEOs, executives and related













1120


CEOs, executives and related







12








Leaders in the administrative and commercial










121






Leaders in administration












1211


Senior finance













1212


Leaders in human resources













1213


Leaders in economic policy and planning













1219


Heads of administrative, not classified in previous base groups




















Also, according to the Combined Nomenclature of goods, approved by Law nr.172 of 25.07.2014, the car category is assigned the following headings:







Heading



Commodity name




1


2




8703


Cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including type machines ,, break "and racing cars:







- Other vehicles with reciprocating piston engine with spark ignition:




870 321


- Cylinder capacity exceeding 1000 cm3




870 322


- Cylinder capacity of 1000 cm3 but not exceeding 1500 cm3




1


2




870 323


- Cylinder capacity of 1500 cm3 but not exceeding 2000 cm3







- Cylinder capacity exceeding 2000 cm3 but not exceeding 3000 cm3




870 324


- Cylinder capacity exceeding 3000 cm3







- Other vehicles (cars) piston engine with compression ignition (diesel or semi-diesel):




870 331


- Cylinder capacity not exceeding 1500 cm3




870 332


- Cylinder capacity of 1500 cm3 but not exceeding 2500 cm3




870 333


- Cylinder capacity of 2500 cm3






Thus, for the fiscal period of 2015, wear and expenses incurred by the trader for the maintenance, operation and repair of cars used in entrepreneurial activity by persons specified in minor groups 112 and 121 Classification of Occupations allow Moldova to deduction for tax purposes for only one car for its head office and each subdivision thereof as defined in Article 5 pct.29) of the tax Code.
Limiting the deduction for tax purposes of wear and maintenance expenditures, operation and repair of cars and passing into account the amount of VAT paid or to be paid for the maintenance, operation and repair of cars according to article 24 par. (41 ) and 102 para. (11) of the tax Code applies only for the cars used by persons specified in minor groups 112 and 121 of the Classifier of occupations in Republic of Moldova.
Taxpayer will independently establish, by an act internally to its head office and each subdivision thereof as defined in Article 5 pct.29) of the Tax Code, the car used in entrepreneurial activity by CEOs, CEOs and comparable categories, as well as leaders in administration (as groups minor 112 and 121 of the Classification of occupations in Moldova) related which will calculate wear for tax purposes, deduct for tax purposes costs and pass the account the amount of VAT related expenses maintenance, operation and repair it.

With reference to the calculation of depreciation for tax purposes, specify that, in its calculation for the fiscal period of 2015, according to article 26 and article 27 of the Tax Code and Regulation on track and calculate the depreciation of fixed assets for tax purposes approved Government Decision no.289 of 14.03.2007, the vehicles used by persons specified in 112 minor groups and 121 occupations in Moldova Classifier related depreciation deduction is prohibited according to article 24 par. (41) of the fiscal Code are to be excluded the Register of fixed assets by type of property and wear them for tax purposes with the remaining value out of the car (at the beginning of the reporting period), determined from the amount by which it was included in that category.
Taxpayer expenditures on maintenance, operation and repair cars for the purposes of Article 24. (41) and 102 para. (11) of the Fiscal Code represents all costs incurred, including material goods, maintaining, securing and improving the status of current conditions, safety and operation, as well as expenses incurred for removing failures of any kind, regardless of whether those actions are carried out on its own or by engaging third parties.
Taxpayer expenditures on wages, according to the labor contract, drivers and support staff / technical servicing these types of cars, motor third party liability insurance, as required by law, as well as lease payments (operating lease) and interest rates financial leasing is allowed as deduction for tax purposes according to the general principles set out in Article 24 para. (1) of the fiscal Code, in compliance with tax legislation in force.
In respect of the deduction for tax purposes of the fee for using roads by motor vehicles registered in Moldova, mentioned that according to the Tax Code:
- no deduction of income tax, established in Title II of penalties and fines related to him, as well as fines and penalties related to other taxes and obligatory payments to the budget, fines and penalties imposed for violation of normative acts (article 30 para. (1));
- Do not allow the deduction of taxes paid on behalf of a person other than the taxpayer (article 30 par. (2));
- Paid road taxes are included in the composition of expenditure to be deducted in accordance with Title II of this code (art.335 par. (4)).
The provisions of article 24 par. (41) of the Tax Code will not extend the trader's spending on fee for using roads by motor vehicles registered in Moldova, following the these expenses to be deducted for tax purposes on principles General.
If the VAT amount since 01.05.2015 last account the expenditure for maintenance, operation and repair of cars used in entrepreneurial activity by persons specified was conducted for more than one car for its head office and each subdivision, it will be adjusted.
Amount VAT on maintenance costs, operation and repair of cars used in entrepreneurial activity used by persons specified in minor groups 112 and 121 of the Classifier of occupations in Republic of Moldova for not allowing the passage of the account will be reported to consumption or expenses, is deductible under Article 30 of the tax Code.
2. On the rules for granting the right to deduct for tax purposes the annual expenses incurred by the employer for optional insurance premiums of employee healthcare
According to the Tax Code (in the wording of Law No. 71 of 12.04.2015):
- facilities taxable fringe benefits include payments to the employee by the employer to recover personal expenses and payments to workers made other people, except for payments in the budget of state social insurance and compulsory insurance premiums by state payments referred to in Article 24 paragraph. (20) as well as related payments and expenses incurred by the employer due to transport, food and professional studies of the employee as prescribed by the Government (article 19 a));

- Deduction of annual expenses incurred by the employer for the first voluntary health insurance the employee of up to 50% of the insurance premium mandatory medical fixed amount calculated in absolute terms, set for categories of payers set out in Annex 2 of the 1593 Act XV of 26.12.2002 on the year (Article 24 para. (20));
- For individuals who run businesses in the fiscal accounts using cash accounting (art. 44 (1) a)).
Also, according to art. 4 (2) of the Law on mandatory health insurance funds for 2015 74 from 04.12.2015, the first mandatory health insurance fixed amount calculated in absolute value for categories paying out in Annex 2 to the 1593 Act XV of 26.12.2002 is established in the amount of 4056 lei.
Thus, for the fiscal period of 2015, the employer will be entitled to deduct for tax purposes the costs incurred for insurance premiums voluntary health of an employee of up to 2028 lei (4056 lei * 50%).
Simultaneously, we note that expenses incurred by employer premiums for voluntary health insurance of an employee of up to 2028 lei will not be considered under article 19 a) of the Tax Code facilities fringe benefits and that will not be considered taxable income sources to ensure voluntary employee beneficiary.
If costs incurred by employer premiums for voluntary health insurance of an employee will exceed the amount of 2028 lei, exceeding amount will not be allowed as deduction for tax purposes for the employer and for the employee while this will be beneficiary of optional insurance facility provided by the employer who will be taxed according to the general rules established since 01.05.2015 - entry into force of Law No. 71 of 04.12.2015 on amendment of article 19 a) and Article .24 par. (20) of the tax Code.
March. On rules for deduction for tax cuts losses on assets and engagements for financial institutions
According to article 31 par. (3) of the Tax Code (in the wording of Law No.71 of 04.12.2015) , financial institutions are allowed a deduction for losses on assets and conditional commitments, calculated according to IFRS.
In this context, for the fiscal period 2015 the amount of provisions created for cuts losses on assets and conditional commitments shall be allowed as deductions for tax purposes in the amount calculated in accordance with IFRS.
Based on the above, the completion Declaration on income tax (VEN12 form) no longer finds the difference between the amount breakdowns for losses on assets, engagements, recorded for financial purposes as well as for tax purposes. Thus, the Declaration on income tax (form VEN12) among 03 017 Annex 2D, both in column 2 (obvious financial purposes) and in column 3 (established for tax purposes) will reflect the same amount of spending losses on assets and conditional commitments, calculated according to IFRS. Other tax liabilities and income tax implications related to 2015 will not exist for financial institutions as a result of changes made to Article 31 para. (3) of the Fiscal Code Law No. 71 of 04.12.2015.
4. On the application of the rules on the deduction for tax purposes of donations made for charitable or sponsorship
According to Article 36 para. (1) of the Fiscal Code (in the wording of Law No.71 of 12.04.2015), the resident taxpayer has the right to deduct any donations made by him during the fiscal year philanthropic or sponsorship, but no more than 2% of taxable income.
Thus, amendments to Article 36 para. (1) of the Fiscal Code Law No. 71 of 12.04.2015, dipped limit for tax deduction for charitable donations made by individuals or sponsorship physical and legal for public authorities and public institutions, non-profit organizations and for family-type orphanages, from 10% to 2% of taxable income.

Accordingly, the final determination of tax liabilities on income tax for the fiscal period 2015 the taxpayer will be entitled to deduct expenses incurred during 2015 for conducting philanthropic donations or sponsorship in favor of public authorities and institutions public, non-profit organizations and for family-type orphanages, only in the amount of 2% of his taxable income.
Philanthropic donations or sponsorship will be deducted only if their confirmation as provided by the Rules on how confirmation of donations for charitable and sponsorship purposes, approved by Government Decision No. 489 of 04.05.1998.
Explanations issued by the Ministry of Finance, State Tax Inspectorate and the territorial state tax contrary to this statement is considered obsolete.
Also mentioned that all doubts arising from the implementation of tax legislation shall be interpreted in favor of the taxpayer, according to art. 11 (1) of the Tax Code.
Similarly, persons exempt from taxes and / or fees, and those who have miscalculated tax and / or duty due to incorrect explanations, submitted by the tax authority, are exempted from responsibility for reducing, incorrect or non-payment calculation them, according to art.234 par. (4) of the tax Code.
II. General political direction and the tax and customs legislation of the Ministry of Finance will publish this informative in the Official Gazette of the Republic of Moldova.
III. Main State Tax Inspectorate will inform this informative territorial tax bodies and all stakeholders.