Disclosure Requirements

Under the new transfer pricing regime, effective 1 January 2024, taxpayers engaged in related party transactions must comply with the following disclosure requirements:

Taxpayers with annual related party transactions aggregating MDL 20 million or more must prepare and submit transfer pricing information by the 25th day of the third month following the end of the tax year;
Taxpayers with annual related party transactions aggregating MDL 50 million or more must prepare and submit a transfer pricing file (Local File) within 6 months from the end of the tax year (see under Standard Documentation below); and
Taxpayers with annual related party transactions aggregating MDL 20 million but not exceeding MDL 50 million are required to prepare and submit a transfer pricing file (Local file) only upon request of the tax authorities (within 60 days of such request).

Taxpayers whose total value of transactions with related parties does not exceed MDL 1 million during a tax year will not be subject to transfer pricing audit and verification by the tax authorities.

It is clarified that for the purpose of determining the thresholds and documenting the transactions, the total value of the transactions represents the income or expenses recognized according to the accounting records arising from the transactions carried out with all related parties but excludes exchange rate differences and revaluation of assets and liabilities reflected in the accounting records as a result of transactions with related parties (except for foreign exchange transactions).

Taxpayers who are not required to submit the transfer pricing file (Local file) are required to submit the following information and documentation at the request of the tax authorities for pre-audit:

Taxpayer information such as organizational, legal, and operational structure of the taxpayer, the list of affiliated persons, including branches / permanent representative offices and their identification data, and geographical location of affiliated persons; and information on the direct and indirect affiliation relations of the taxpayer concerned in the transactions;
Information on the main outlets for deliveries made;
Information about the main competitors;
Information about payments made and received in controlled transactions;
Agreements/contracts related to controlled transactions concluded;
Taxpayer's accounting records; and
Other information, legal acts, and documents that were the basis for carrying out controlled transactions.

Standard Documentation

Under the new transfer pricing regime, effective 1 January 2024, taxpayers with annual related party transactions aggregating MDL 50 million or more must prepare and submit a transfer pricing file (Local File) within 6 months following the end of the tax year, whilst taxpayers with annual related party transactions aggregating MDL 20 million but not exceeding MDL 50 million are required to prepare and submit the local file only upon request of the tax authorities (within 60 days of such request).

The transfer pricing file (Local File) must contain the following information: Taxpayer information, including:

the organizational, legal, and operational structure of the taxpayer;
a list of related parties, including branches / permanent representative offices and their identification data, and the geographical location of related parties; and
information on the direct and indirect relations of the taxpayer and any changes therein;

A general description of the taxpayer's activity and business strategy, including changes that occurred during the year, presentation of the main sales markets, and description of the taxpayer's research and development activity, where applicable;
Description of the transactions carried out with each related party, including:

a description of the transactions, including physical characteristics, quality, country of origin and manufacturer, presence of a trademark, and other information;
a description of transactions related to possible business restructuring during the tax period;
a description of transactions consisting of intra-group services, including the allocation of costs and services that contribute significantly and definitively to the creation of added value; and
a description of transactions related to cost contribution arrangements;

Information about payments made and received in controlled transactions involving the taxpayer who has the obligation to prepare the transfer pricing file;
Copies of all agreements/contracts related to controlled transactions concluded by the taxpayer required to prepare the transfer pricing file;
Functional analysis and detailed comparability analysis of the taxpayer required to prepare the transfer pricing file and the tested party, which are parts of the controlled transactions, including the description of the reasons in case of carrying out the multi-year analysis;
Description of the transfer pricing method for each transaction and its selection criteria;
Description of selected comparable uncontrolled transactions (internal or external), if applicable, and information on profitability indicators or margin or result or price of relevant transactions of the independent companies on which the transfer pricing analysis is based, including a description of the methodology for searching for comparables and the source of this information;
Calculation of the range of comparable prices;
Description of any comparability adjustments made and indication of adjustments made to the results of the tested party and/or comparable uncontrolled transactions;
Description of the reasons why it was concluded that the relevant transaction prices were set at arm's length based on the application of the chosen transfer pricing method;
Copies of information, legal acts, and documents that were the basis for carrying out controlled transactions; and
Details of the main competitors.

The transfer pricing file must be kept for at least 6 years following its submission.

Country-by-Country (CbC) Reporting

Moldova has till date not introduced a Country-by-Country reporting requirement. However, it has joined the OECD’s Inclusive Framework, all members of which have committed to implement the BEPS minimum standards, including Country-by-Country reporting.

Public CbC Reporting

On 22 November 2023, Moldova published Law No. 320, implementing the public Country-by-Country (CbC) reporting requirement in Moldova. The law partially transposes Directive (EU) 2021/2101. The Directive provides for a public CbC reporting threshold of annual consolidated revenue of EUR 750 million in each of the last two consecutive fiscal years and, when required, a public CbC report must be made available free of charge to the public within 12 months following the close of the relevant year. Under the domestic law of Moldova, the public CbC reporting threshold is set at MDL 15.750 billion. The public CbC report information must be included as a separate chapter in the annual management report ("Raportul Conducerii"). The law takes effect on 1 January 2025.

The information required to be reported includes the following:

Name of group entities and description of their main activities;
Revenues from sales;
Profit (loss) before taxation;
Income tax expenses;
Income tax paid;
Net profit (net loss) of the management period; and
Previous years undistributed profit or uncovered loss.

The public CbC reporting requirements do not apply to standalone undertakings or ultimate parent undertakings and their affiliated undertakings where such undertakings, including their branches, are established or have their fixed places of business or permanent business activity only within Moldova and in no other tax jurisdiction.

Further guidance on the implementation of public CbC reporting requirements in Moldova is yet to be published.

Language of Documentation

The transfer pricing file must be prepared in Romanian. If the agreement/contracts and copies of information, legal acts, and documents that were the basis for carrying out controlled transactions are in another language, an authorized Romania translation must also be provided unless the language is English or Russian.

Penalties

The new transfer pricing regime, effective 1 January 2024, provides for the following specific penalties in case of non-compliance with the transfer pricing regime:

Late submission of transfer pricing information or transfer pricing file - MDL 30,000 to MDL 50,000;
Submission of false transfer pricing information resulting in the reduction or avoidance of tax obligations - MDL 60,000 to MDL 90,000 applies to tax obligations arising from tax audits initiated by the SFS for the fiscal periods starting from 2028;
Presentation of the transfer pricing file with inauthentic information – MDL 150,000 to MDL 200,000;
Failure to submit transfer pricing file – MDL 300,000 to 500,000; and
Failure to submit transfer pricing information – MDL 100,000 to MDL 150,000.

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