18.07.2016

"Next year it is quite possible to have a VAT exemption mechanism for donated food of certain quantity. We can also think it out and make the analysis in the next few months until the beginning of the tax laws amendment campaign in September." Minister of Finance Vladislav Goranov said the above after a meeting with the Ombudsman Maya Manolova and representatives of the Ministry of Agriculture and Food, food producers, the Bulgarian Food Bank and the Bulgarian Red Cross. Minister Goranov pointed out that "the most important thing is to make the design of the donation scheme and to specify the beneficiaries in a way preventing any possibility the percentage which will be VAT exempt upon donation to become a hidden business activity for food producers and traders".

The Minister of Finance took the view that donations were in principle something good as long as they did not affect the system of VAT. "In this specific case there is one wrong incentive - when food is being scrapped there is a possibility for an adjustment of the deducted input VAT, and when a donation is made - VAT is due", Goranov said.

In turn, the Ombudsman Maya Manolova said that food producers had to be encouraged to donate surplus production "but, of course, there need to be serious control mechanisms". She pointed out that together with the Ministry of Agriculture and Food and food producers she had taken the commitment to work, until the end of July, on the texts introducing the necessary changes to the Food Act and then to present those to the Ministry of Finance to be analysed and taken into account in the preparation of the 2017 budget. Minister Goranov said that the Ministry of Finance had the capacity to set the necessary changes in the VAT Act so that they could work. "I think that we are of the same mind on what is required in order to limit any potential risks to the fisc," Minister Goranov said and added that in case abuse was prevented the negative budgetary impact would be bearable.