In recent years, Moldova has emerged as a small but rising star in the world of technology and innovation. At the heart of this transformation lies the Moldovan IT Park, a government initiative aimed at promoting the growth of the country's IT sector.
How does it work? And is it worth it?
Sadly, the answer depends on where you live and which country you are from. In this blog post, we will provide an overview of the Moldovan IT Park and explore the benefits it offers to both businesses and individuals.
First, some background info.
What is the Moldovan IT park? And what is it for?
The Moldovan IT Park, established in 2016, is a special legal framework that provides a range of incentives and benefits to IT companies operating in Moldova. These incentives include a simplified taxation system, reduced social security contributions, and the possibility of hiring 'foreign' specialists under simplified procedures (more about that later).
Such measures should make the IT Park an attractive destination for both local and international companies looking to establish or expand their presence in Moldova.
One of the key benefits of the Moldovan IT Park is its favourable tax regime. IT companies registered under the IT Park are subject to a fixed income tax rate of 7%, significantly lower than the standard corporate tax rate. This not only reduces the tax burden on businesses but also encourages investment and stimulates economic growth. Additionally, companies registered under the IT Park are exempt from value-added tax (VAT) on IT services provided to foreign customers, further enhancing their competitiveness in the global market.
Another advantage of the Moldovan IT Park is the reduced social security contributions for employees. Under the IT Park regime, employers pay a reduced social security contribution rate of 7% for their IT employees, compared to the standard rate of 23%. This reduction in labor costs makes it more affordable for companies to hire and retain skilled IT professionals, fostering a thriving IT ecosystem in Moldova.
So far, so good. But does it work?
The Moldovan IT Park claims to facilitate the hiring of foreign specialists by providing simplified procedures. But whilst this may be true, the whole scheme is still subject to Moldova's opaque and unfair immigration rules.
The problem is that, unlike the Estonian e-residency program, you can only sign-up to be a resident of the Moldovan IT Park if you have a Moldovan digital ID and to get this you must first visit Moldova.
Easy enough, right? Wrong.
It's easy if you are from the EU or a country that can visit Moldova without a visa, but if you're not then you will be sucked down a rabbit hole of opaque and contradictory rules, unresponsive institutions and frustrating bureaucracy.
Our problems started when my Moroccan colleague, a talented and high-value developer tried to apply for a visa to visit Moldova - something that's required if you want to register a company and join the IT Park. Something that *should be* a straightforward formality.
It went something like this…
- To get his visa, he was told that he needs an invitation letter
- The invitation letter must come from a Moldovan citizen or legal entity
- Neither IT Park or Invest Moldova can issue this invitation letter
- If you find anyone that can invite you, they must take it to the Ministry of Immigration for approval
- There is next to no information available online (at least not in English) to explain how to do this…. Etc etc
You get the picture. All the bureaucratic nonsense that has plagued this part of the world for decades kicks-in and after weeks of emails you'll be left wondering why you ever considered Moldova in the first place.
This is a real shame because Moldova is a wonderful country with a huge amount to offer, and by the looks of things a huge amount of hard work has gone into the creation of the IT Park and in branding Moldova as a real competitor in the global race to attract IT companies and staff.
It's also a shame because Moldovans have been on the receiving end of unfair and restrictive immigration rules for decades, yet they are now undermining their own reform efforts with their own immigration nightmare.
In conclusion,
the Moldovan IT Park has played a crucial role in nurturing the growth of the IT sector in Moldova and its favourable tax regime and reduced social security contributions have attracted a handful of companies from Western Europe. However, there's a huge amount of competition for EU 'digital nomads' who are more likely to choose Italy, Spain or Croatia as their destination of choice and until they resolve these immigration issues, it's unlikely there will be an influx of developers from Africa, Asia or the 'global south'.
It's not a lost cause, but there's still work to do.
Share Our Blog Post with Your Network!
