Corporate - Deductions

Last reviewed - 20 September 2021

As a general rule, expenses incurred by a company are deductible for CIT purposes only if they are deemed as ordinary and necessary, aimed at deriving taxable income, and justified with adequate supporting documentation.

The rate of deductible expenses for business purposes (ordinary and necessary) that are not adequately supported by necessary documentation is 0.2% from taxable income.

Depreciation and amortisation

Fixed assets are subject to CIT depreciation if their useful economic life exceeds one year and acquisition costs exceed MDL 6,000.

For the 2020 tax period, taxpayers may still opt for the following methodologies for calculating fixed assets depreciation for tax purposes:

  • straight-line method, or
  • by categories of fixed assets.

Under the straight-line method, the fixed assets evidence for tax purposes is kept on each asset in part by applying the straight-line method of depreciation.

Under the second method, the tax law provides that fixed assets are divided into five categories of property. These categories are set out according to specific rules, mainly on the assets’ useful life (i.e. the number of years during which the assets’ utilisation generates economic advantages; the useful life for each type of depreciating asset is regulated by governmental decision). The depreciation rates vary as follows:

  • First category (e.g. buildings): 5%.
  • Second category (e.g. constructions): 8%.
  • Third category (e.g. roads, certain equipment): 12.5%.
  • Fourth category (e.g. industrial equipment): 20%.
  • Fifth category (e.g. cars, computers, furniture): 30%

Starting with the 2021 tax period, the straight-line method shall be mandatory.

Intangible assets are subject to CIT amortisation according to the straight-line method.


According to the National Accounting Standards, goodwill is recognised as an intangible asset. However, the Moldovan Tax Code does not expressly provide for specific rules regarding CIT deduction.

Start-up expenses

According to the National Accounting Standards, start-up expenses incurred by companies (e.g. stamp taxes paid upon company registration, drawing up of registration documents, manufacture of stamp) are not recognised as an intangible asset. Therefore, such expenses are to be treated as current expenses.

Interest expenses

Different CIT deductibility rules apply for interest on loans used for carrying out operational activities and for loans used for investment activities performed on an occasional basis.

As a general rule, deductions for interest expenses are allowed for CIT purposes, provided such expenses are deemed as ordinary and necessary for carrying out the activities of the business. Expenses should also be incurred for the purposes of obtaining taxable income and justified by adequate backup documentation.

If the interest paid by a Moldovan company relates to its operational or day-to-day activities, the related expenses are deductible for CIT purposes, taking into account the following:

  • Interest expenses incurred by businesses, based on loan agreements, for the benefit of individuals and legal entities (except financial institutions, micro-financing organisations, and leasing companies) are deductible for CIT purposes within a specific limit established by law. Specifically, such interest expenses are deductible up to the limit of the average weighted interest rate on credit loans offered by banks to legal entities, depending on the period of the loan and its currency (e.g. different limits are applied for loans in Moldovan lei and those in foreign currency).
  • If the loan is obtained for the purpose of acquiring/building fixed assets, the related interest expense should be capitalised to the initial fiscal value of such assets until they are put into exploitation. The deductibility of such interest expense is capped at the above limit. The excess difference is treated as a non-deductible expense for CIT purposes.

If interest relates to an investment activity, the interest expense is deductible for CIT purposes within the limit of the income derived from the investment.

Bad debt

Bad debts are deductible for CIT purposes, provided certain conditions are fulfilled and justifying documents are made available. Starting 1 January 2020, deduction of bad debts up to MDL 1,000, for which the statute of limitation has exceeded three years, is allowed.

Charitable contributions

Charity and sponsorship expenses are deductible for CIT purposes if borne for the benefit of public authorities and public institutions financed from the state budget, as well as non-profit organisations and family-type foster homes within certain conditions, at up to 5% of taxable income.

Donations made by the taxpayers on the bank accounts of the Ministry of Finance or of the medical institutions in relation to the COVID-19 epidemic situation would be fully deductible for 2020 CIT purposes.

Fines and penalties

Fines and penalties related to CIT, related to other taxes and due payments to the state budget, or for violations of legal acts are not deductible for CIT purposes.


CIT is not deductible for CIT purposes.

Other taxes are generally deductible for CIT purposes, except those paid on behalf of another person.

Other significant items

Among others, the following expenses are also generally deductible for CIT purposes:

  • Research and development (R&D) expenses incurred during the fiscal year as current expenses, should certain conditions be met.
  • Business trip expenses, protocol expenses, and expenses on insurance of business entities, within the limits approved by the government.
  • Waste, spoilage, and perishability expenses, within the threshold approved by the company’s manager.
  • Leasing companies are allowed to deduct provisions to cover claims related to non-recovery of lease rates and interest rates up to specific limits established by legislation and provided certain conditions are met.
  • Financial institutions are allowed to deduct loss loan provisions of assets and conditional commitments calculated according to International Financial Reporting Standards (IFRS).
  • Micro-finance organisations are allowed to deduct loss loan provisions calculated according to requirements established by the National Commission on the Financial Markets.
  • Starting 1 January 2020, taxpayers are allowed to deduct the expenses incurred in relation to benefits in kind granted to their employees if such benefits have been subject to all payroll taxes.
  • Payments performed by the employers in relation to testing of the employees for COVID-19 are fully deductible for CIT purposes.
  • Starting 1 January 2021, membership fees paid for the benefit of foundations or other business associations are permitted for deduction within the limit of 0.15% from the remuneration fund.

Non-deductible expenses

Among others, the following expenses are generally not deductible for CIT purposes:

  • Expenses not adequately supported by necessary documentation that exceed the 0.2% rate as mentioned above.
  • Provisions and accruals, except for financial institutions, micro-finance organisations, and leasing companies as mentioned above.
  • Losses incurred from transactions between affiliated parties. Losses from transactions between related parties being considered the positive result of the difference between the total annual amount of the cost of sales and the total sale revenue booked throughout the fiscal year in dealing with a related party.

Fiscal losses

Fiscal losses may only be carried forward for five consecutive years following the year the losses were incurred, provided the company records taxable income. If the company recorded fiscal losses for more than one year, such losses are carried forward in the order in which they arose. Fiscal losses are recorded on off-balance-sheet accounts.

Losses may not be carried back.

Payments to foreign affiliates

A Moldovan legal entity generally may deduct expenses related to payments to foreign affiliates to the extent that these amounts were actually paid and are not in excess of what it would have paid to an unrelated entity (i.e. arm’s length). However, the payer is required to hold documentary evidence for the actually performed transactions. Certain types of expenses may follow general rules of deductibility that would limit their amount (e.g. interest expenses on loan agreements).