Moldova Proposes Major VAT Reforms — Broadening Tax Base and Aligning with EU VAT Framework

Summary

• Moldova has launched a public consultation on a comprehensive VAT reform package aimed at simplifying the VAT system and aligning it more closely with EU VAT Directive principles. The reform is part of a broader fiscal modernisation programme linked to Moldova’s EU accession trajectory. It seeks to reduce structural fragmentation in the VAT regime, improve revenue collection efficiency, and broaden the tax base by reassessing reduced rates and exemptions across key sectors of the economy. In particular, the proposal targets the gradual elimination or reduction of preferential VAT treatments that are currently applied to hospitality, pharmaceuticals, agriculture, and energy-related supplies.
• A key feature of the reform is the potential extension of the standard VAT rate to categories of goods and services currently subject to reduced rates (such as 8%) or exemptions. This includes discussions on applying the standard rate to residential property transactions, certain vehicle sales, and low-value e-commerce imports. At the same time, the reform contemplates adjustments to VAT registration thresholds (around MDL 1.7 million turnover) and deregistration mechanisms, allowing smaller businesses to exit the VAT system more easily if turnover declines. These measures aim to reduce administrative burden while tightening overall VAT compliance and neutrality.
• The package also introduces improvements to VAT refund mechanisms, with a proposed broader entitlement to reclaim excess input VAT from 2027 onwards. This is intended to improve cash-flow neutrality for businesses, particularly exporters and investment-heavy sectors. Overall, the reform reflects a dual objective: increasing fiscal capacity through base broadening while simultaneously modernising VAT administration in line with EU accession requirements and digital tax governance standards.

Sources

• VATCalc

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