site.btaParliamentary Budget and Finance Committee Rejects 7 Government-Proposed Tax Bills, Approves 1 Moved by MPs

Meeting on Thursday, the National Assembly voted, 6-2 with 7 abstentions, to reject on first reading seven tax bills moved by the Council of Ministers. 

The Committee members unanimously approved only one bill, amending the Excise Duties and Tax Warehouses Act and moved by a group of Continue the Change - Democratic Bulgaria MPs.

The Government-proposed revisions to the Excise Duties and Tax Warehouses Act would transpose EU directives concerning distance sales of excise goods and would impose excise duties on heated non-tobacco products, whether containing nicotine or not.

The amendments to the Income Taxes on Natural Persons Act propose a unification of the approach to the taxation of income from immovable property from sources inside Bulgaria accruing to non-resident natural persons, limiting taxability to property within Bulgarian territory, and broadening the range of income payers' information submission requirements concerning non-taxable income so as to deter tax evasion by paying part of remunerations in the form of non-taxable income. The bill introduces 10% deductibility for the profit realized on the sale or exchange of financial assets, including virtual and crypto currencies. The draft legislation would expand the definition of employment relationships so as to avert the simulation of employment relationships in the form of civil-law contracts by equalizing the ratio in which employees and employers share social security contributions under both employment and civil-law contracts. An alternative income tax would be introduced on the income from gathering wild mushrooms and fruits, including truffles but excluding herbs.

The draft revisions to the Tax and Social-Insurance Procedure Code would introduce a financial incentive to persons reporting concealed or undeclared taxable income from transactions, profits and property to a total amount exceeding BGN 100,000. The incentive would amount to up to 10% of the funds collected by the National Revenue Agency as a result of the report.

Another proposal, concerning the Limitation of Cash Payments Act, would lower the maximum amount payable in cash from BGN 10,000 to BGN 2,000.

Employers in all restaurants except one-star ones would be required to pay the wages of their employees by bank transfer and to install a POS terminal on site.

The Corporate Income Tax Act would be amended to transpose EU law and implement OECD recommendations. It is proposed to align the law with the provisions of Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union. This would affect both global groups and Bulgarian groups with an annual turnover exceeding BGN 1.5 billion, which will be charged an effective corporation tax of 15%, up from 10% now.

Licence tax would be levied on legal persons carrying on business as eateries and amusement outlets. A new State aid scheme for farmers would be introduced in the form of corporation tax retention.

The proposed amendments to the Local Taxes and Fees Act would exempt buildings certificated as Class A energy consumption and as near-zero energy consumption from immovable property tax. The bill would also differentiate immovable property tax by settlement, by zone within settlements, and by type of property.

The only bill that the Budget and Finance Committee approved exempts from excise duty beer brewed by natural persons for personal consumption or use within the family or household if not done for a commercial purpose. The revision would benefit some 2,000 homebrewers in Bulgaria.