On 8 December 2020, Bulgaria officially extended the deadline for the submission of annual corporate income tax (CIT) returns and payment of the CIT due. Below is an overview of the main changes.
The deadline for the submission of annual CIT returns and payment of the CIT due has been extended from 31 March to 30 June of the year following that in which the CIT returns refer to. The extension of the deadline was initially introduced as a temporary COVID-19 measure in 2020 regarding tax returns referring to year 2019. It will now be a permanent extension.
CIT and withholding tax (WHT) exemption for profits from transactions with shares performed at regulated markets outside the European Union
As from 1 January 2021, profits and losses from transactions with shares performed at markets equivalent to regulated markets outside the European Union (approved by the European Commission in accordance with Directive 2014/65/EC) will not be recognized for CIT purposes and will not be subject to WHT in Bulgaria. Currently, this exemption is applied only in the cases in which such transactions are performed on EU/EEA regulated markets.
Higher exemption threshold for one-off taxation of food vouchers
As from 1 January 2021, social expenses of eligible persons incurred?? for food vouchers of up to BGN 80 (currently, up to BGN 60) per hired person per month will be exempt from one-off taxation.
Amendments to the rules for advance CIT instalments
As from 2021, the deadline for submission of the declaration for the increase/decrease in the amount of advance CIT instalments will be 15 November of the year in which the instalments are due. Default interest will be due only if the amount of the annual CIT due exceeds the amounts of the advance CIT instalments paid by 25% (currently, by 20%).
Also, the advance monthly CIT instalments for December will be due no later than 1 December of the same year (currently, 15 December). The same deadline, i.e. 1 December instead of 15 December, will apply for the payment of CIT instalments for the third quarter (for persons obliged to pay quarterly CIT instalments).
The forecast advance CIT instalments for a year will have to be reported in a new declaration, which should be submitted to the National Revenue Agency between 1 March and 15 April of the year they refer to. Currently, this information is reported in the annual CIT return for the previous year. In addition, the obligation to pay the advance CIT instalments is currently determined based on the net sales revenue from the previous year, whereas, as from 2021, it will be determined based on the net sales revenue for the year before the previous year.
Accelerated tax depreciation for approved software
Persons using approved software for sales management on commercial sites will be able to apply a 100% annual tax depreciation rate in terms of such software, as well as for computers and mobile phones on which such software is installed.
Extension of the period for the application of tax relief for manufacturing activities in municipalities with high unemployment rates
The period for the application of the tax relief for manufacturing activities in municipalities with high unemployment rates has been extended until the end of 2023 (initially, it was until the end of 2020).
The official text of the amendments to the CIT Act is included in the additional provisions of the amendments to the VAT Act and is available here (in Bulgarian only).