site.btaParliamentary Budget Committee Decides to Keep Deposit Interest Tax at 8%, Restores Connection between Production of Excise Duty Goods and Central Customs Department

18 ECONOMY - BUDGET COMMITTEE - VAT - UPDATED

Parliamentary Budget Committee Decides to Keep Deposit Interest
Tax at 8%, Restores Connection between Production of Excise Duty
Goods and Central Customs Department


Sofia, December 2 (BTA) - The tax on income from interests will
keep its level of eight per cent, according to draft amendments
to the Value Added Tax Act adopted by the National Assembly
Budget and Finance Committee on second reading Tuesday.

The initial version of the Bill envisaged a ten per cent
increase of this tax but, eventually, the MPs adopted a proposal
of the Reformist Bloc (RB) to keep it at eight per cent.

"We are against any tax increase," RB's Martin Dimitrov said.
"There is no need to increase taxes, when we seek growth and
turning savings into investments," Dimitrov noted. The increase
of any tax gives a bad signal and, in the specific case, it
would have contributed minimum revenues to the budget.

Lyudmila Petkova, Director of the Tax Directorate with the
Finance Ministry, commented that the decision of the
parliamentary committee was unexpected but that the broadening
of the tax base was very important. She explained that the
hitherto effective provisions allowed exemption of certain
deposits from the tax in question and the banks would offer
namely such products to their clients.

Petkova pointed out that the decision of the parliamentary
committee generates a deficit of 17.5 million leva, which would
affect the 2015 budget. "The more concerning fact is that a 10
per cent interest is imposed on the income from interests of
foreign legal persons and they are in a position of
discriminatory treatment, said she. Petkova stated that the
reduction of the tax for foreign legal persons down to eight per
cent has not been commented but that, generally, the two taxes
should be equalized.

Besides, the MPs adopted a new concept on charging excise duty
goods through amendments to the Excise Duty and Tax Warehouses
Act, adopted within the Transitional and Final Provisions of the
Value Added Tax Act. The changes in the charges of excise duty
were proposed between the first and second reading discussions
of the Bill.

All devices for measurement and control of the production and
trade in excise duties are included in the scope of the Excise
Duty and Tax Warehouses Act and the data from them should be
submitted electronically to the Central Customs Department. This
will be of crucial importance for determining the amount of the
excise duty.

Participating in the meeting was Customs Agency Chief Vanyo
Tanov, who recalled that such a control system was introduced in
April 2013 and the revenues then increased by 37 million leva
only within a month. Then it was removed under the cabinet of
prime minister Plamen Oresharski.

According to Tanov, all tax warehouses already have installed
measurement devices and the re-introduction of the system would
not incur serious costs.

However, Bulgartabac representatives attending the meeting,
objected seriously to the proposed changes saying that, if their
production facilities have to be re-set so as to meet the new
requirements, the companies will run into huge expenditures.

Tanov said that every machine for the production of cigarettes
has an installed counter in it.

The MPs decided that the technical details, related to the
introduction of the new system, should be discussed with the
business.

Lyudimla Petkova told BTA that the idea is to make the changes
effective as of January 1, 2015 and for this purpose they have
been included in the Transitional and Final Provisions of the
VAT Act.