Moldova adjusts tax relief and sin taxes to boost formal jobs

Moldova will increase its monthly personal tax allowance from 2,475 MDL to 3,335 MDL while raising excise duties on tobacco and diesel by 20%, under the draft 2027 fiscal policy.

The measures seek to encourage formal employment and stimulate private investment by offsetting wage tax relief with levies on luxury and less healthy products, State Secretary at the Ministry of Finance Corina Alexa said on Moldova 1.

Encouraging formal labor and taxing vices

“The concept of this fiscal policy focuses heavily on formal work and supporting wage earners,” Alexa said during the "Bună Dimineața" program. “We are working to create conditions for additional investment, and to achieve these goals we are compensating by taxing vices and less healthy consumer products.”

The draft legislation establishes a three-year calendar of excise duty adjustments for 2027, 2028, and 2029, outlining an average annual increase of approximately 10% across most excisable goods, including alcohol, perfumes, caviar, and vehicles. However, tobacco products and diesel fuel will see a higher 20% excise hike next year.

Targeted adjustments to value added tax

Officials stressed that the revised fiscal regime will not automatically push up consumer grocery prices. The reduced 8% Value Added Tax (VAT) rate will remain in place for basic staples such as bread, dairy products, eggs, and locally grown fruits and vegetables, while the VAT on poultry meat will drop from 20% to 8%.

In contrast, the VAT rate applied to the hospitality sector (HoReCa), as well as crop farming and horticulture supplies, will rise from 8% to 12%. Alexa noted that adjusting VAT rates does not necessarily translate into higher retail shelf prices.

Relief on individual income taxes

The increase in the monthly personal allowance will leave employees with higher net earnings. Under the new threshold, the first 3,335 MDL of monthly income will be fully exempt from income tax.

“Today, a citizen's non-taxable income is 2,475 MDL per month,” Alexa explained. “Following this increase, 3,335 MDL will be exempt from tax. For a gross salary of 10,000 MDL taxed at 12%, an employee will take home 8,408 MDL.”

Parliament approved the draft fiscal and customs policy in its first reading on September 10 following extensive debates with the parliamentary opposition. The bill must pass a second reading before taking effect.

Translation by Iurie Tataru

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