On January 1, a number of changes in tax legislation came into force that affect the application of Value Added Tax (VAT). The tax changes concern deductions, exemptions, the use of electronic tax invoices and other important issues for taxpayers, IPN reports.

One of the legislative novelties is the inclusion in Article 95 of the Tax Code of a new category of transactions, which are not subject to VAT taxation. These include settlements of additional costs or revenues resulting from the balancing of the energy system, according to the electricity market rules approved by ANRE. This amendment mainly concerns operators in the energy sector and clarifies the tax regime applicable to them.

In terms of deductions, taxpayers now have the possibility to deduct VAT on goods and services purchased in relation to tangible and intangible fixed assets, in case of a change in the tax regime applicable to them.

Another significant provision allows the deduction of VAT on goods destroyed in exceptional circumstances, such as natural disasters, but only if they are confirmed in accordance with the rules laid down by the legislation. These changes give greater flexibility to businesses in managing unforeseen expenditure.

The amendments to Article 103 remove VAT exemptions without the right of deduction for certain categories of goods and services. These include products produced in-house by the canteens of public institutions, the services of accredited science and innovation organizations, and the output of curative workshops in psychiatric hospitals. In contrast, a clear exemption has been introduced for fixed assets used directly in the manufacture of products or provision of services, if they are included in the share capital of an entity. This regulation standardizes the application of the exemptions and eliminates vagueness.

The tax invoice has become strictly regulated. Taxable persons are now obliged to use electronic tax invoices (e-invoice) for supplies of goods and services to economic agents that do not have tax relations with the budgetary system of the Republic of Moldova. This excludes supplies of electricity, heat, natural gas, utilities and electronic communication services. The new requirements were introduced to increase transparency and reduce the risk of tax evasion.

The changes to the VAT system simplify some procedures and remove some previous exceptions. However, they require taxpayers to be more rigorous in complying with the requirements on the use of electronic invoices and tax reporting. Taxpayers are encouraged to carefully consider the new provisions and seek assistance, if necessary, to comply with these rules.