November 4 2022

Government Proposes Windfall Tax on Fossil Fuel Sector

Source: IBFD Tax Research Platform News

The Council of Ministers has submitted to the parliament a proposal for the introduction of a windfall tax on companies in the crude petroleum, natural gas, coal and refinery sectors.

The windfall tax will be in the form of a temporary solidarity contribution of 33% and apply to the excess profits generated by EU companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors. The contribution will be calculated based on the taxable profits for 2022 and 2023 that are above a 20% increase in the average of the taxable profits, as determined under the Corporate Income Tax Act, for the tax periods 2018, 2019, 2020 and 2021.

The deadline for payment of the temporary solidarity contributions will be the same as the deadline for payment of the annual corporate income tax, i.e. not later than 30 June of the year following the tax year.

The proposal is in in line with the EU proposal for a Council regulation on an emergency intervention to address high energy prices, which was presented at the end of September 2022.

As next steps, the proposal should be voted on in two readings by the parliament. Further developments will be reported when they occur.

The full text of the proposal, issued on 1 November 2022, is available here (in Bulgarian only).