May 20 2022

Bulgaria Proposes VAT Cut on Utilities to Fight Inflation

Source: IBFD Tax Research Platform News

The Bulgarian government on 18 May 2022 proposed a package of various anti-crisis measures to support citizens and businesses suffering the burden of high inflation. Among the suggested tax related measures are the following:

  • introducing a temporary 0% VAT rate for bread (currently subject to the standard 20% VAT rate);
  • introducing a reduced 9% VAT rate for heating, hot water and natural gas for domestic use;
  • increasing the threshold for mandatory VAT registration from BGN 50,000 to BGN 100,000 (from 1 January 2023); and
  • increasing the tax relief for child support, i.e. a deduction from the personal income tax base (from BGN 4,500 per child/per annum to BGN 6,000).

The government also proposes to tax public and private organizations that profit from electricity price hikes.

The government's proposal must be submitted to the parliament and voted on during two readings. Further developments will be reported when they occur.

The proposal, issued on 18 May 2022, is available here (in Bulgarian only).