November 2022 / Bulgaria

The Council of Ministers has submitted a proposal for amendments to the Value Added Tax Act (VAT Act) to the parliament. Among other things, it introduces a VAT bad debt relief.

The current VAT Act does not include an option for recovery of VAT by suppliers in situations of total or partial non-payment by their customers. The proposal, however, would introduce the "bad debt relief", which makes it possible, subject to certain conditions, for suppliers to recover the VAT paid into the budget on supplies for which they did not receive, either fully or partially, the payments from their customers.

As next steps, the proposal should be voted on at two readings by the parliament.

The full text of the proposal, issued on 31 October 2022, is available here (in Bulgarian only).

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).

The Council of Ministers has submitted a proposal for amendments to the Excise Duties and Tax Warehouses Act (EDTWA) before the parliament. Among other things, it proposes the implementation of Art. 21(6)(b) of the Energy Taxation Directive (2003/96), which provides that Member States need not treat as "production of energy products" operations by which the user of an energy product makes its reuse possible in their own undertaking provided that the taxation already paid on such product is not less than the taxation which would be due if the reused energy product were again to be liable to taxation.

Additionally, the amendments also introduce:

• an exemption from registration and reporting obligations for people who consume their own electricity produced from renewable energy sources for their own needs in a plant with a total installed capacity of up to 1 MW;
• a clarification that persons who import or introduce compressed natural gas transported with specialized vessels are obliged to register under the EDTWA; and
• an obligation for persons that import or receive various energy products from other EU member states to declare (before the customs authorities) whether these products are intended to be used as motor fuel or heating fuel.

As next steps, the proposal should be voted on at two readings by the parliament.

The full text of the proposal, issued on 31 October 2022, is available here (in Bulgarian only).