site.btaParliament Exempts Donated Food from VAT on First Reading

Parliament Exempts Donated Food from VAT on First Reading

Sofia, September 7 (BTA) - Bulgaria's Parliament Wednesday unanimously passed on first reading amendments to the Value Added Tax Act, exempting donated foods and food products from VAT. The bill was moved by two MPs of the Reformist Bloc.

The exemption will apply to food donations of an aggregate value not exceeding 0.5 per cent of the annual turnover of the taxable-person donor, provided that the donation date is not earlier than 30 days before the expiry date of the food products concerned.

The revisions are intended to relax the VAT treatment of expiring food products to the benefit of a food bank supplying vulnerable groups or social service providers and care givers to such groups.

The Bulgarian Food Bank says that Bulgaria, which is Europe's third poorest country, with 1.54 million people, including at least 400,000 children (21.2 per cent of the population), living at the poverty line, wastes annually some 670,000 t of meat, sausages, fruits, vegetables, bread and other foods. According to official statistics, 53.5 per cent of Bulgarians are undernourished, which means that some 3.89 million cannot afford meat, fish and fruits frequently enough. At the same time, food producers and traders are reluctant to donate expiring products because they have to pay 20 per cent VAT without making any profit instead of having the food scrapped at a fraction of the cost.

The bill envisages strict control over this type of donations and lays down sanctions for abusers. Therefore, the measure is not expected to inflict losses on the Exchequer.

National Assembly Budget Committee Chair Menda Stoyanova said that the motion is good but an in-depth analysis is needed and provisions and mechanisms must be proposed to minimize the possibility of fraud. In her opinion, a ceiling must be imposed on the turnover or on the scrapped foods reported by the trader so far. Stoyanova argued that the VAT Act is the least problem, what matters more is how food banks will be regulated and controlled and whom the donations will benefit.

Zhelyo Boichev MP of BSP-Left Bulgaria described the bill as "a step in the right direction" but noted that before it comes up for a second reading his parliamentary group will enter motions intended to deter abuse. Boichev said that his party has reservations about the mechanisms proposed by the sponsors of the draft legislation and will seek a more enhanced role for the Ministry of Labour and Social Policy and the Agency for Social Assistance.

Dimiter Bayraktarov MP of the Patriotic Front said that this bill will not be detrimental to the public purse but, on the contrary, its implementation will result in ample saving. He argued, though, that 0.5 per cent of the total turnover is not enough and should be increased to at least some 2 per cent.

Peter Chobanov MP of the Movement for Rights and Freedoms said that not all aspects are well considered and no provisions are made for a mechanism to prevent abuse.