On 30 August 2018, the Ministry of Finance published, for public consultation, proposals for amendments to the following tax legislation:
- the Corporate Income Tax Act;
- the Personal Income Tax Act;
- the Value Added Tax Act;
- the Excise Duties and Tax Warehouses Act; and
- the Local Taxes and Duties Act.
The public consultation will run until 29 September 2018.
A summary of the main topics of the proposal is set out below.
Corporate Income Tax Act
- Implementing the provisions of the European Anti-Tax Avoidance Directive (EU) 2016/1164 (ATAD); in this respect, new rules are suggested regarding limitation of interest deduction, controlled foreign entities (CFC), exit taxation, general anti-tax avoidance and hybrid mismatches.
- Introducing an option for submission of corporate income tax returns in cases where a taxable person has not performed any activities in the tax year, in order to report tax on expenses, incurred losses, reporting of hidden profit distribution, etc.
- Providing an opportunity to operators of food vouchers to use the amounts collected from employers for payment of VAT (if due).
- Amending rules regarding declaration and payment of corporate income tax, withholding tax, tax on expenses and alternative tax in cases of liquidation or termination for insolvency of a company and where a permanent establishment of a foreign company ceases its activities. In this respect, it is proposed that the last tax period of such companies/permanent establishments be from 1 January of the year of deregistration until the date of deregistration, with the last corporate income tax, withholding tax, tax on expenses and alternative tax being due within 30 days after the date of the deregistration.
Personal Income Tax Act
- The mandatory electronic filling proposal applies to:
- all declarations and reports of self-insured persons;
- annual reports for income paid to individuals under article 73, paragraph 1 of the Personal Income Tax Act; and
- information on income paid by employers to residents of other EU Member States.
- New tax rules for awards are proposed as follows:
- monetary and non-momentary awards not provided by the employer will be subject to a one-off tax due by the taxpayer; (Currently, such income is reported by the recipient in the annual personal income tax return.) and
- awards up to BGN 100 are to be exempt from taxation. (Currently, this limit is BGN 30.)
- New administrative simplifications are proposed as follows:
- abolishment of the requirement for declaration by the spouse stating that he or she will not use a tax relief in the case of application of tax reliefs for young families and children (including children with disabilities);
- regarding tax reliefs for children (including children with disabilities), the relief may be used by both parents as opposed to one of the parents which is currently the case;
- exemption from the requirement to submit annual activity reports for traders not performing activities (as per the Accountancy Act) during a tax year; and
- abolishment of the obligation for employers to provide paper notes on income paid and taxes and social security and health insurance contributions withheld to their employees unless they so request. The information included in these documents must be submitted by employers to the National Revenue Agency.
Value Added Tax Act
Introduction of a threshold for digital services
A threshold of BGN 19,558 (EUR 10,000) is to be introduced regarding the place of supply of digital services by EU suppliers to non-taxable persons established in other EU Member States. Under the new rule, if the supplies of telecommunications, broadcasting and electronically supplied services in the current and/or the previous calendar years are below this threshold, these supplies will be deemed to be made where the supplier is established, provided that it is established in only one EU Member State. This proposal implements the provisions of Directive (EU) 2017/2455.
Extension of self-assessment possibility
It is proposed that the possibility for self-assessment (VAT return) be extended to importers of goods such as aluminium, nickel, sulphur, tin, lead, zinc, organic chemical products, etc. To avail the possibility of self-assessment, importers will have to meet certain criteria: (i) each import must amount to at least BGN 50,000; and (ii) the importer should not have any unsettled tax and social security liabilities. Currently, self-assessment by a taxable person is allowed only in very limited cases (e.g. for large investment projects).
Register of e-shops to be created by tax authorities
It is proposed that e-shops be obliged to register in a special register that will be created and maintained by the National Revenue Agency.
Extension of the list of VAT-exempt supplies
It is proposed that the intermediary services related to international adoption under the Family Code.
Administrative simplifications
- Abolishment of the requirement for issuing protocols for self-assessment of VAT in cases of intra-community acquisitions and cross-border supplies subject to reverse charge (as from 1 July 2019).
- An opportunity for VAT deregistration within 12 months of the beginning of the year following the voluntary VAT registration. (Currently, this period is 24 months.)
- E-shops to be allowed to issue electronic fiscal receipts in cases where there is no physical contact between the seller and the buyer.
Excise Duties and Tax Warehouses Act
- Introducing a special notification procedure for bottled alcoholic beverages and cigars used for collections.
- Introducing a new procedure for cancellation/de-activation of incorrectly submitted documents in relation to excise duty labels.
- Extending the scope of commercial sites where tobacco products can be sold.
- Banning publishing advertisements and notifications for e-sales of excisable products (with some exceptions, such as goods with excise duty labels or in cases where the excise duty has been paid).
- Clarifying that the consumption of energy products, within the curtilage of an establishment that has produced them, for the purpose of producing other energy products is not exempt from excise duties.
- Extending the situations in which joined liability for excise duties will be applied.
- Introducing new administrative simplifications for licensed warehouse keepers and registered consignors/consignees, i.e. abolishing the requirement to provide to the customs authorities the names and signature specimens of the persons authorized to sign electronic administrative documents.
Local Taxes and Duties Act
Amendments to tax relief for main home
If more than one main home is declared, the full amount of the real estate tax due for all homes of the taxable person will be charged. In addition, there will be no reduction of the garbage collection duty applied in such cases.
Changes to determining the taxable base for immovable property
It is proposed to abolish the increase in real estate tax for immovable property with features such as aluminium joinery, air conditioning, etc.
Administrative simplifications
In the case of transactions involving motor vehicles, public notaries are required to check the relevant registers for any unpaid tax on the vehicles. In addition, the public notaries will be obliged to inform the local municipalities of any completed transfers of immovable property and motor vehicles, as well as of the taxable base and local tax paid, within 7 days.