On 12 October 2026, the Government of Moldova convened a dedicated working session to address mounting concerns from the real estate sector regarding the 0.5% contribution levied on construction investments. The contribution, originally introduced under Law No. 123/2022 on Infrastructure Development Funding and effective from 1 January 2023, applies to the total contracted value of all investment projects in the construction sector. Revenues are earmarked for the National Infrastructure Fund, which finances road, energy, and water infrastructure projects. Over the past two years, the levy has generated approximately MDL 450 million annually, representing a modest but predictable revenue stream. However, industry representatives from the Moldovan Association of Real Estate Developers (MARED) presented data showing that the contribution, when combined with a 15% year‑over‑year increase in construction material costs and elevated borrowing rates, has compressed developer margins to below 5% on average. This has led to a 22% decline in new housing starts in the first half of 2026 compared to the same period in 2025. The Ministry of Finance and the Ministry of Infrastructure and Regional Development presented preliminary fiscal impact assessments, while MARED called for either a reduction of the rate to 0.25% or a full exemption for affordable and social housing projects aligned with the Government’s Housing Strategy 2025‑2030. The meeting, chaired by the Prime Minister, concluded with a formal directive to establish an interministerial working group comprising the Ministry of Finance, Ministry of Infrastructure, Ministry of Economy, and the State Tax Service. The group is tasked with reviewing the contribution’s design, assessing its impact on investment flows and housing affordability, and proposing concrete amendments by 15 December 2026. The Prime Minister emphasized that any revision must preserve fiscal stability and infrastructure funding commitments, suggesting that alternative revenue sources or expenditure efficiencies be identified in parallel.
Key Takeaways
- Levy Review Initiated: The Government has formally acknowledged industry concerns and mandated an interministerial working group to evaluate the 0.5% construction investment contribution, with a focus on its impact on housing affordability and investment flows. The group is expected to deliver recommendations by mid‑December 2026, with potential legislative amendments to be tabled in the spring 2027 parliamentary session.
- Affordable Housing Exemption Proposed: Developers have put forward a proposal to exempt social and affordable housing projects from the levy entirely, arguing that the contribution contradicts the government’s own housing strategy targets. The Ministry of Finance has signaled openness to targeted exemptions provided fiscal revenues are preserved, and has requested detailed modeling on the revenue foregone versus the social benefits of increased affordable housing supply.
- Fiscal Revenue vs. Investment Climate: The contribution generated approximately MDL 450 million in 2025, representing a dedicated revenue stream for infrastructure. Any reduction must be offset by alternative funding sources, prompting discussions about reallocating existing budget lines, introducing efficiency measures in infrastructure procurement, or exploring public‑private partnership models to maintain investment momentum without compromising fiscal discipline.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement