site.btaHospitality Sector To Call for 9% VAT at Press Conference

Restaurant and hotel industry organizations are holding a press conference on Monday at the BTA National Press Club in Sofia, calling for a 9% VAT rate for the sector. 

The event is organized by the Bulgarian Hotel and Restaurant Association (BHRA), the Association of Establishments in Bulgaria (AEB), the Bulgarian Association of Establishments (BAE), and all regional branches of these organizations.

Economic, statistical, and other arguments in favour of maintaining the reduced VAT rate will be presented at the press conference.

BTA notes that on Friday, representatives of the restaurant and hotel industry published a protest note acknowledging the country's "significant financial deficit." However, they emphasized that thousands of businesses in the sector are also struggling, having been among the hardest hit globally in recent years by force majeure events, economic crises, wars, market share losses, and ongoing staff shortages. 

"For these reasons, and considering the specifics of the tourism industry, a reduced VAT rate has become a long-term measure in almost all European countries, including our direct regional tourism competitors, despite their economic difficulties," the statement says.

The organizations are calling for an urgent meeting with GERB leader Boyko Borissov and representatives of the coalition governing council to present their estimates, demands, and proposals.

Industry representatives have announced preparations for immediate protest actions, some of which began over the weekend under the slogan 9 Minutes of Darkness for 9% VAT. The initiative involves switching off lights and music in establishments at 9:00 p.m. for nine minutes, under the motto Politicians, Save Bulgarian Tourism. The protests will continue daily until the final vote on the 2025 State Budget in Parliament.

The sector is urging all its regional structures to be ready for both local and national protests.

At the start of the week, BHRA issued a statement to the media, arguing that a lower VAT rate attracts more tourists seeking affordable food and beverage prices, allows local restaurants to remain competitive against establishments in countries with similar tourism profiles where VAT has already been reduced, and helps prevent job losses and bankruptcies.

The association cites German economists who argue that a lower VAT rate reduces incentives for tax evasion, as businesses have less motivation to operate without issuing receipts. This, in turn, increases tax collection, as business revenues grow.

BHRA points out that the sector's effective VAT rate averages around 15% because high-alcohol beverages, wine, and beer—which account for about 50% of restaurant turnover—have always been taxed at 20%, while only food and soft drinks benefited from the 9% rate.

At a parliamentary Tourism Committee meeting in late February, Tourism Minister Miroslav Borshosh reaffirmed the ministry’s clear position in support of differentiated VAT rates for tourism. "Regardless of which part of the sector it applies to, the reduced rate is beneficial and important for its development," he said, adding that this applies to both tour operators and restaurants. However, the proposed budget in its current form includes a 20% VAT rate for all, the minister noted, emphasizing that the key issue is the state of the revenue side of the budget.

The reduced VAT rate for the restaurant sector was introduced as an anti-COVID measure in the summer of 2020 and was repeatedly extended. However, as of January 2024, the standard 20% VAT rate is back in effect. During the first meetings of the Budget and Finance Committee this year, proposals were made to maintain the reduced VAT rate for sectors where it had been introduced, but they were not adopted.