Moldova

Ease of Doing Business Rank: 48

Overview

 

Geographic location

Moldova is a landlocked Eastern European country and former Soviet republic. Ukraine lies to the north, east, and southeast, Poland, Slovakia and Hungary lie to the west, Romania lies to the southwest.

Spoken language

Romanian is the official language of Moldova, spoken by 80.2% of the population.

Russian is the most commonly spoken minority language. Approximately a tenth of the population considers it their native tongue and 14.1% use it daily. Other minority languages include Gagauz and Ukrainian.

English is taught in school, but not commonly spoken.

Population

The 2019 population estimate is 4.04 million.

According to available data, Chișinău is the largest city (644,204), followed by Tiraspol (129,500) and Bălți (102,457). All other cities have populations of less than 100,000.

Popular industries

The top industries in Moldova revolve around agriculture and food processing, energy, manufacturing and consumer goods.

Education

The Legatum Prosperity Index ranks Moldova’s educational system 56th out of 149.

Popular entity types

The most common type of business entities in Moldova are Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Company and Joint Stock Company.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Moldovan incentives for business

Moldova offers seven free economic zones, one international free port and one international free airport. The main goals of these areas are investment, production for export and job creation. The country offers the same opportunities to foreign companies as local entities.

Businesses operating in a free economic zone enjoy many advantages including a 25 percent income tax exemption and a 50 percent export income tax exemption ranging from three to five years, depending on the investment amount.

Companies do not pay VAT or excise tax either and residents are protected from legislative tax changes for between 10 and 20 years, depending on the investment amount.

The Giurgiulesti Free International Port offers access to the Black Sea and many tax advantages. These include a 25 percent income tax exemption for 10 years following the first year of reported income. After this period, businesses enjoy a 50 percent exemption. Companies do not pay VAT or excise tax either.

In some sectors such as energy or telecommunications, the government may favor large investments from experienced foreign investors. However, in most cases local and foreign investors receive equal treatment. The government allows investment in any sector, providing it respects their security, health, environmental and anti-monopoly legislation.

History & Features

 

Main cities for business

Chișinău is the capital and financial center of the country.

Popular historical & tourist attractions

The capital city of Chișinău dates back to 1420, but suffered greatly during World War II and a major earthquake in 1940. The Soviets rebuilt the city and architecture includes a Triumphal Arch celebrating their 19th-century victory over the Ottomans as well as Stalinist structures.

Just north of Chişinău, the Orheiul Vechi holds remnants of tribes from 2,000 years ago. Excavations also uncovered a mosque, two mausoleums and ancient bath.

While Moldova does not have mountains or beaches, it does have the Orhei National Park. It is the meeting place of the Eurasian steppe, the East-European forest-steppe, and the Carpatho-Danubian basin. It offers biological and cultural diversity, hilltops dotted with Orthodox churches, and traditional Moldovan villages.

The fortified medieval town of Soroca with five bastions dates to the 15th century. It protected Moldova from many invaders including the Tartars, Cossacks and Ottomans.

The Tipova Cave Monastery is built into the rock face of a 200 meter cliff above the Dniester River. The monastery includes three chambers, the oldest dating back to the 11th century.

History

Dacian tribes settled the area approximately 2,000 years ago. Later, the Roman and Roman and Byzantine Empires ruled the area. Mongols and Tatars raided the area frequently during the Middle Ages.

In the middle of the 14th century, the first independent Moldavian principality emerged which included most of present-day Moldova and part of Romania. It was at its height at the end of the 15th century, but eventually fell to the Ottomans.

When the Russians defeated the Ottoman Turks in the Russo–Turkish War of 1806–1812, the eastern portion of the Moldavian principality became part of the Russian Empire.

Following Russia’s collapse in World War I, the annexed principality temporarily joined forces with Romania. However, Russia did not recognize the union.

Between World Wars, Romania claimed the eastern area as its own, but in 1940 the Soviets reoccupied the area. The region became the Moldavian Soviet Socialist Republic.

In 1941, Germany declared war on Soviet Russia. Nazi and Romanian troops occupied the area and Romania took power. When Germany’s power waned at the end of World War II, the Paris Peace Treaty of 1947 ceded the territory to the Soviets again.

Moldova remained under strict Soviet rule until Gorbachev’s reforms in the late 1980s. The nationalist Moldovan Popular Front began in 1989, were elected to the Soviet parliament in 1990 and declared sovereignty. The following year, they declared full independence and conducted their first democratic elections.

However, not all regions agreed with these changes as they feared reunification with Romania. As a result, the Transdniestran region demanded independence. This eventually led to civil war in 1992.

Eventually, a three-party peacekeeping force including Russian, Moldovan and Transdniestran troops established an uneasy peace in the area.

Until 2019, these forces remained at an impasse. However, Moldova always kept its sights on the European Union and claimed neutrality. When all members of the Constitutional Court of Moldova resigned and the chairman of the Democratic Party fled the country after a wave of Moldovan bank scandals, it opened the doors for sweeping reforms.

Pro-EU and Russian Socialist forces formed a coalition. This may lead to an improved democratic process and renewed talks with Transnistria. However, Russian troops remain in the area and experts don’t see this as a permanent, stable arrangement.

Other relevant facts

According to the 2014 census, most inhabitants identify as Moldovan (75.1%), followed by Romanian (7%), Ukrainian (6.6%), Gagauz (4.6%), Russian (4.1%), Bulgarian (1.9%) or other ethnicities (0.8%).

Figures from 2014 suggest most Moldovans are Orthodox (90.1%), followed by other Christian denominations (2.6%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Moldova is the 87th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Moldova 97th globally and states, “The government has tried to address weaknesses in the financial sector, but growth is hampered by endemic corruption and a Russian ban on imports of Moldova’s agricultural products. The economy remains vulnerable to weak administrative capacity, vested bureaucratic interests, higher fuel prices, Russian political and economic pressure, and unresolved separatism in the Transnistria region.”

World Bank’s “Doing Business” rankings rate Moldova 48th for ease of doing business in the world.

Moldova Entity Support Services by Blueback Global

Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

The common scenarios that may give rise to the need for Blueback Global’s services include the following:

With our integrated approach, you can expect the following experience:

We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Moldova. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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