site.btaUPDATED Council of Ministers Adopts Tax Package

At an extraordinary meeting Monday, the Council of Ministers adopted a package of tax laws, which will be presented to Parliament as early as this Thursday so that it can be considered by Parliament's Budget and Finance Committee. Announcing the proposed package at a news briefing here, Finance Minister Assen Vassilev recalled that the tax laws were published for public consultation at the end of September.

The package includes revisions to the VAT Act, Tax and Social Insurance Procedure Code, the Excise Duty and Tax Warehouse Act, the Personal Income Taxes Act and the Corporate Incomes Taxes Act.

Vassilev said that a number of employer and trade union organizations submitted suggestions for changes and ways to accomplish them, so that the package can achieve the targets, the Minister explained.

He said that as soon as the tax package goes through Parliament and it becomes clear what the attitudes of the deputies are, the Finance Ministry will put up for discussion by the trade unions and the employer organizations the 2024 budget bill. The reason is that only then will it be clear what revenues can be expected.

Revisions to the VAT Act

The zero VAT for bread and flour remains until mid-2024 but it will be left to Parliament to decide whether to keep the lower VAT rate of 9% for restaurants. Several measures are proposed - that all restaurants except the smallest ones be required to have POS terminals and pay their staff by bank, and also pay a minimum wage that is higher than the national minimum wage - and if these are all accepted, then the 9% VAT (instead of the 20% flat VAT for all other services) can remain as a temporary measure because in this way the budget revenue will be bigger than that from the increased VAT, Vassilev explained. 

There are more changes for restaurant businesses. All with a turnover of less than BGN 100,000 will be charged a patent tax and the proceeds from their corporate income tax will go to the municipalities, which control such businesses anyway: how many tables they have and the rest, said the Minister. He underscored that it will ensure an extra income for municipalities.

Another revision allows a receiver of goods or services to refuse to pay if the provider refuses to issue a receipt for the payment.

The revisions also aim to eliminate some discrepancies with the EU acquis and improve provisions that hamper the enforcement of the law, said the government press office.

Revisions to Corporate Income Tax Act, Personal Income Tax Act

For multinational groups of companies and large national groups in the European Union, whose profits are taxed with an effective tax rate below 15%, an additional tax will apply so that an effective tax rate of 15% is reached. The proposed changes are related to the implementation of the provisions of Council Directive (EU) 2022/2523 of December 15,  2022 aimed to ensure a global minimum level of taxation of multinational groups and large national groups in the EU.

Another proposed change aims to empower the tax administration to go after income from labour concealed via contracts of service (rather than having a contract of employment).

A licence tax will be introduced for wild mushroom and truffle hunters.

The ceiling for cash payments will drop to BGN 5,000 from the current BGN 10,000, again aiming to shine light on the shadow economy. That will be enacted via revisions to the Tax and Social Insurance Procedure Code.

Another change to this Code offers cash incentives for reporting tax non-compliance. That incentive will be equal to 10% of the addition revenue that the reporting of the tax non-compliance has generated for the Exchequer but on one condition: that the additional revenue is no less than BGN 100,000. That threashold aims to make sure the incentive scheme is not used for resolving interpersonal or business conflicts.

Revisions to the Excise Duty and Tax Warehouses Act introduce excise duty for heated products other than tobacco.