March 20 2020

COVID-19 pandemic: emergency tax measures

Source: IBFD Tax Research Platform News

On 18 March 2020, a bill proposing tax-related measures in response to the COVID-19 pandemic and state of emergency in Bulgaria was introduced to the National Assembly. The bill is available on the website of the National Assembly.

More specifically, the bill proposes the tax-related measures set out below.

Extension of deadlines for payment and reporting of taxes to 30 June 2020
The deadlines for filing and payment of the following taxes are extended to 30 June 2020:

  • annual corporate income tax and one-off taxes on social and representative expenses  (from 31 March 2020);
  • annual tonnage tax on the operating and management of vessels (from 31 March 2020);
  • annual tax on the activities of publicly funded enterprises such as state and local authorities (from 31March 2020);
  • annual personal income tax due by sole traders and farmers (from 30 April 2020); and
  • tax on auxiliary activities under the Gambling Act (from 31 March 2020);

Еxtension of deadlines for publishing annual financial statements

Companies are granted an extension of the deadline for publishing annual financial statements for 2019 to 30 September 2020 (from 30 June 2020). Dormant enterprises should file their declaration for lack of economic activities by 30 June 2020 (from 31 March 2020).

Changes to advance CIT amount and relief from default interests on underpayment for the first half of 2020

Companies subject to advance CIT instalments must pay advance CIT during the first half of 2020 based on 50% of their 2018 taxable profits. No default interest will apply for underpayment of advance CIT for the period 16 July - 31 December 2020.

New powers of Customs Agency to donate confiscated health-protecting consumables and other goods

The Customs Agency is entrusted with the power to donate to hospitals, the Red Cross, kindergarten or schools confiscated goods that are useful in the preservation of public health.

5% Discount for prepayment of local real estate and vehicle tax

Taxpayers will receive 5% discount of the local real estate and vehicle tax if they prepay the annual tax due by 30 June 2020.

Mandatory paid leave

During the state of emergency, employers will be allowed to release their employees on paid leave without the consent of the employee as long as such leave does not exceed half of their annual paid leave.

Suspension of enforcement proceedings and the initiation of new enforcement proceedings

Enforcement proceedings for the collection of public liabilities such as tax and social securities will be suspended during the state of emergency. Default interest will continue to accrue during the suspension period. New enforcement proceedings will not be initiated during the state of emergency unless certain supervening circumstances arise. Such circumstances include but are not limited to protection of vital state or public interest or if any delay may significantly impede the collection of public liabilities.

Suspension of statute of limitations and certain statutory deadlines

The absolute 10-year statute of limitations for the collection of public liabilities will be suspended during the state of emergency. Certain deadlines for the initiation of enforcement proceedings such as in cases of insolvency, public tenders and others are also suspended.

The bill for tax measures will be introduced for discussion and a vote at first hearing in the National Assembly in the coming days.