site.btaFinance Ministry Proposes Changes in VAT Rules to Prevent Fraud in Fuel Trade

Finance Ministry Proposes Changes in VAT Rules to Prevent Fraud in Fuel Trade

Sofia, May 19 (BTA) - The Finance Ministry proposes revisions in the VAT Act in a bid to crack down on fraud in fuel trade, Finance Minister Vladislav Goranov told the press here Thursday.

The proposed revisions set in place a mechanism whereby traders in liquid fuel will be required to provide a collateral in cash, treasury bonds or an unconditional and irrevocable bank guarantee for a period of one year to the competent Revenue Agency office.

The collateral will be equal to 20 per cent of the value of the transaction but not less than 50,000 leva in a year.

The requirement for the payment of a collateral will become applicable when a VAT-registered trader makes taxable liquid fuel deliveries worth over 25,000 leva or an intra-community acquisition of liquid fuel for over 25,000 leva, or when he discharges liquid fuel worth over 25,000 leva for consumption.

The rules for paying a collateral shall not apply to the owners of tax warehouses or to entities which have set in place a system linking it up with the National Revenue Agency.

Analyses have shown that while the collection of excise duty is guaranteed by the system for operation of tax warehouses, nothing guarantees the collection of VAT. "There is a huge discrepancy between the receipts from excise duty and from VAT," the Finance Minister said.

He dismissed suggestions that the proposed measure will push up fuel prices.

The measure will affect mostly companies which are newly registered with the purpose of breaking the chain of supply and VAT payment, he added.