site.btaFood Service Outelts' Umbrella Bodies Oppose Lower VAT Rate Scrapping

The Bulgarian Association of Catering Establishments (BACE) and the Association of Food Service Establishments in Bulgaria accused Prime Minister Nikolay Denkov of being "even less competent in tourism" than the "totally incompetent Tourism Minister Zaritsa Dinkova". The two organizations issued a common position prompted by a televized interview in which Denkov said he did not see a reason why the reduced VAT rate for food service activities should be kept next year. In the PM's words, the number of tourists in Bulgaria is large and there is no prerequisite for the 9% rate to remain in effect.

The VAT rate for food service activities was reduced from the standard 20% as an anti-crisis measure during the pandemic and later on as a way to cushion the electricity price spike, for which restaurateurs were separately compensated by the State. Nevertheless, menu prices have increased steadily.

BACE argues that the number of foreigners who visited Bulgaria as tourists in July has dropped by nearly 250,000 since the last pre-pandemic year 2019. June saw a decline, too, and the trend will hardly be reversed in August. "Actually, the number of tourists indeed largely preconditions the VAT rate for food and accommodation service activities. "The more tourists arrive, the more favourable conditions should be provided to the hospitality industry. Otherwise Greece, for one, would not have applied a differentiated VAT rate," the position reads.

Official data show that after the VAT rate reduction, the state budget revenue from direct and indirect taxes generated by the food services sector has increased rather than decreased. "In 24 EU Member States, the VAT rates for the food and accommodation service activities are differentiated," the position says.