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How much it costs us an employee in the Republic of Moldova?

The moment when a new member of the team is being recruited within the company, the employer assumes, beside the salary, some other expenses as, for example, the assurance of a safe and well organized working place, expenses related to the materials he-she will consume and obviously the mandatory taxes for the state budget.

We will analyse further on the situation of the Republic of Moldova regarding the taxes which the employer has to support for his own employees.

Thus, in agreement with the legislation from the Republic of Moldova, each employer is obliged to calculate and retain each month different taxes regarding his own employees taking into account the exemptions claimed by the employee, the contributions or the bonuses calculated in accordance to the decisions made by the Major Fiscal State Inspectorate, The Medical Insurance National House and The National Social Insurances House of the Republic of Moldova.

Thus, which are the taxes that an employer has to assume when hiring a new employee in the Republic of Moldova?

A first one, the income tax is obligatorily retained from the wages and transferred to the Major Fiscal State Inspectorate.

The formula for calculating the assessment on income for natural persons is a more complicated one due to the fact that the percentage rate differs depending on the quantum of the wages, so that these quota are divided as it follows:

  • 7% from the annual taxable income that does not excel the amount of 25200 lei per year; so, if the salary is bigger than 2100 lei per month, 2100 will be taxed with 7%, the rest with a higher quota
  • 18% from the annual taxable income that excels the amount of 25200 lei per year – the difference between the wages and 2100 will be taxed with 18%.

The difference between the two quota was imposed in order to protect the employees having small salaries. Also related to the assessment on income, there must be mentioned the fact that each resident natural person drives advantage from a personal deduction that values 6300 lei per year and which is inferred from the gross wages before applying the the tax quota.

Another quota is the one payed by The Medical Insurances National House, namely The bonus for medical insurance, a tax that can have fix quota (the case of an individual enterprise) or per cent quota (the case of limited companies or joint-stock companies).

Thus, the employers and the employees pay for the budget of The Medical Insurance National House 6% calculated contributions from the salary out of which:

  • 3% payed by the employer
  • 3%are calculated from the employee's gross wage

A final tax, which is the most onerous for the taxpayer is the fee paid to the National Social Insurance.

Thus the employer is obliged to retain from the employee's salary and to steer in the House Budget National Social Insurance:

  • 5% - individual mandatory contributions to the state social insurance fund (pension fund)
  • 24% - State Social Security contributions required by the employer.

The method of calculation is relatively simple: from the gross salary is excluded:

  • 7% or 18% - income tax
  • 3% tax health insurance
  • 5% tax to fund pensions.

Following the calculation we obtain the net salary.

Additional to the taxes deducted from the gross wage, the employer shall pay 3% + 24% of gross salary – taxes paid by the employer for the employee.

In conclusion, at the end of each month, the employer turns in the National Budget of the Republic of Moldova between 42% and 60% of the employee’s wage, representing taxes and mandatory contributions.

To give an overview of labor costs in Moldova we have to mention that the minimum wage on economy level in Moldova is 400 lei (approx. 28 Euro) per month, and according to the National Bureau of Statistics the average salary in the economy in October 2008 , was 2609 lei (approx. 188 euros) per month.

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