March 2023 / Bulgaria

22 Marzo 2023

Bulgaria Aims to Boost Budget with Proposed Amendments to Corporate and Indirect Tax Legislation

The Bulgarian Council of Ministers has presented various proposals to amend tax legislation with the purpose of securing more revenue for the Budget. The Budget, itself, is expected to be presented in April 2023. Whereas, the below-presented resolutions are aimed at reducing the State deficit from its current 6% to 3%.

Included in the Council of Ministers proposed amendments are: (i) the introduction of a tax on excess profits for legal entities based on the principles laid down in the Regulation on an Emergency Intervention to Address High Energy Prices (2022/1854); (ii) an increase of excise duty on e-cigarettes; and (iii) an increase of toll fees.

Further, it is expected that the reduced VAT rates for flour, bread, baby products and books will be extended, but the VAT waiver applicable to restaurants and fitness centres will be stopped.

The key tax measures are summarized as follows:

  • corporate income taxation
    • solidarity contribution of 33% on excess profits generated in the period from 1 July 2023 to 31 December 2023. The taxable base is to be determined, generally, as a difference between the tax profit for the period 1 July – 31 December 2023 minus 50% of the average value of the tax profits during the period 2018-2021 increased by 20%. It is proposed that the contributions would be paid as monthly advance instalments during the period 1 July - 31 December 2023 and a final payment would be made by 1 July 2024.
    • taxation of cryptocurrency, it is suggested that taxable income from the sale or exchange of virtual currencies should be defined as the sum of the profits realized during the year, determined for each specific transaction, less the amount of losses realized during the year, determined for each specific transaction plus 10% costs.
  • indirect taxation
    • it is proposed an amendment to the VAT Act by limiting the scope of application of the reduced 9% VAT rate.
    • it is proposed an amendment to the Excise Duties and Tax Warehouses Act (EDTWA). The main change is the suggested increase of the excise duty rate for electronic cigarette liquid.