Reform and Modernization of the Tax System of the Republic of Moldova in the Context of the Challenges of the Digital Economy

Abstract

The digital economy, with its rapid growth, poses significant challenges to the the traditional tax systems globally, including in Moldova. As e-commerce, online services, and digital platforms expand, traditional tax frameworks, designed for activities within national borders and based on physical presence, reveal vulnerabilities. Moldova faces an urgent need to reform its tax system to address these challenges effectively. This study analyzes essential measures to modernize Moldova's fiscal framework in line with the digital economy's realities. Using an integrated approach, it examines the impact of digitization on tax revenue collection, identifies gaps in current legislation, and assesses opportunities for fair and efficient taxation of digital activities. Methodology includes literature analysis, comparative case studies of reforms in emerging economies, and simulations predicting tax reform impacts in Moldova. Findings reveal that targeted reforms can increase revenues and ensure a fair distribution of tax burdens between local and international companies, including tech giants. Modernizing tax administration through advanced technologies and establishing a robust legal framework can enhance compliance and mitigate tax evasion risks. Swift action is essential to prevent fiscal losses and sustain long-term budgetary health. The study proposes concrete reforms: introducing a taxation regime for digital services, creating legal mechanisms for cross-border digital revenues, and leveraging technology to implement these measures. These recommendations, based on international best practices and tailored to Moldova's context, contribute to global debates on digital taxation and provide clear guidance for Moldova's fiscal future. CZU: 004.4:336.22(478); JEL: H20, H21, H25, H32, O33, K34