site.btaParliament Adopts Phased Increase of Excise Duty on Cigarettes from 2016, EU Minimum to Be Reached January 1, 2018

Parliament Adopts Phased Increase
of Excise Duty on Cigarettes from 2016,
EU Minimum to Be Reached January 1, 2018


Sofia, November 19 (BTA) - Bulgaria's Parliament Wednesday
passed on first reading amendments to the Excise Duties and Tax
Warehouses Act, providing for a phased increase of the excise
duty on cigarettes until it reaches the EU minimum of 90 euro
per 1,000 cigarettes by December 31, 2017.

The specific excise duty rate will be 101 leva per 1,000
cigarettes as from January 1, 2017. The ad valorem rate will be
set at 25 per cent of the retail selling price as from January
1, 2016, 27 per cent as from January 1, 2017, and 28 per cent as
from January 1, 2018. The amount of excise duty may not be less
than 161 leva per 1,000 cigarettes as from January 1, 2016, 168
leva as from January 1, 2017, and 177 leva as from January 1,
2018.

The present rate, 101 leva per 1,000 cigarettes (specific
excise), 23 per cent of the retail selling price (ad valorem
rate) and 148 leva per 1,000 cigarettes (minimum amount), will
be retained next year so as to crack down on smuggling which has
increased dramatically over the last year and a half, according
to the Finance Ministry.

The amendments were introduced by a Government-proposed Bill to
Amend and Supplement the Value Added Tax Act, which also revises
the Corporate Income Tax Act, the Income Taxes on Natural
Persons Act, the Local Taxes and Fees Act and the Tax and
Social-Insurance Procedure Code in order to transpose EU
requirements.

Also on Wednesday, the National Assembly defeated a motion by
Ataka to introduce a zero VAT rate on food products, medicines,
textbooks and teaching aids made in Bulgaria. Ilian Todorov MP
of Ataka pointed out that the citizens of Europe's poorest
country must not pay one of the highest VAT rates on foods and
medicines. "We seek to reduce the price of medicines for
Bulgarian citiznes," he said, adding that a number of medicines
manufactured in Bulgaria are more expensive here than in Greece,
Macedonia, Turkey and Serbia.

Luchezar Ivanov MP of GERB responded that Ataka's motion will
cost the public purse 1,200 million leva. He specified that this
measure can be introduced by 2020.

Valeri Simeonov MP of the Patriotic Front argued that
preferential treatment cannot be extended to local manufacturers
because this is contrary to the EU requirements and its
financial impact on the State budget has not been justified.

Georgi Kadiev MP of BSP-Left Bulgaria said that Ataka's bill
will lead to a loss of revenue, difficult administration and tax
fraud. Personally, he would not back a zero rate on foods but
would back a reduced rather than a zero rate on medicines.

Lyutvi Mestan MP of the Movement for Rights and Freedoms (MRF)
said that the MRF has reservations about Ataka's attempt to
conduct social policy through taxes. LI/LG

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