Taxes Accounting

New cash transaction limits from 2025: What businesses need to know?

Law № 34 of February 29, 2024, on cash transactions and amendments to regulatory acts establishes new rules for handling cash in the Republic of Moldova. The law aims to increase transparency in financial operations and reduce the risks of the shadow economy. Let’s examine the main changes and their impact on businesses.

Existing restrictions and new developments

Some of the restrictions on cash transactions remain unchanged:

Cash transactions between legal entities must not exceed 100,000 MDL per month.
Payments received from individuals are limited to 100,000 MDL per payment.

What will change?

Starting in 2025, new regulations will come into effect. Several key changes include:

Dividends: from 2025, cash dividend payments will be limited to 100,000 MDL per year for each participant.
Loans: the same limit applies to loans – the total amount of cash payments should not exceed 100,000 MDL per year.
Cash payments to an individual who is not engaged in entrepreneurial activities, totaling no more than 100,000 MDL per month. There are several exceptions, such as payments within employment relationships, loans granted by banks, and some others.

Restrictions have also been imposed on cash transactions between individuals when purchasing real estate and vehicles:

Real estate can only be purchased with cash if the value stated in the sales contract does not exceed 100 average monthly salaries projected for the economy, including when paid in installments, and the value of a vehicle must not exceed 50 average monthly salaries projected for the economy. If the property exceeds this value, the payment must be made via bank transfer, except for an amount of up to 200,000 MDL, which may be paid in cash.

Penalties and violations

Penalties for exceeding cash transaction limits have also been defined:

Fines ranging from 3% to 10% of the excess amount will be imposed for non-compliance with the established limits.

For illustration, let’s consider examples:

Suppose Company "ABC" paid its sole founder dividends in May of 90,000 MDL and in September of 70,000 MDL. The total cash payment for the year amounted to 160,000 MDL. In this case, the excess would be 60,000 MDL. If we calculate the maximum fine, it would be:

60 000 MDL x 10% = 6 000 MDL.

In addition to fines for exceeding the limits, the law provides additional liability measures for those who fail to comply with the established rules for handling cash. In particular, fines are imposed for failure to return unused cash issued by companies for operational and business expenses.

Article 8 of Law № 34 describes the penalties for such violations in detail, including fines for failure to return or late return of unused cash.

Failure to return unused cash: if a person does not return the cash to the company’s cashier that issued it, the State Tax Service imposes a fine of 10% to 18% of the unreturned amount. For example, if 50,000 MDL is not returned, the fine could be:

50 000 MDL x 10% = 5 000 MDL (minimum fine).

Late return of cash: in case of a delay in returning the funds, a fine of 0.1% of the amount per day of delay is imposed, but no more than 5% of the total debt. If 50,000 MDL is returned 10 days late, the minimum fine would be:

50 000 MDL x 0,1% x 10 = 500 MDL for the delay.

Conclusion

These changes are aimed at simplifying the control of cash flow and improving the transparency of financial operations in businesses. It is important to keep track of legislative changes in a timely manner and adapt your business processes to new requirements to avoid fines and other penalties.

Starting January 1, 2025, the new limits will come into force, and we recommend preparing your business's financial system in advance for these changes.

FlagMAN-D helps your business stay informed of changes in tax legislation to ensure proper accounting and accurate tax reporting. We are ready to advise you on all tax and accounting-related matters.

FlagMAN-D

2024-09-19 16:04