05.10.2021

The Ministry of Finance has published for public consultation draft laws amending and supplementing three tax laws – the Value Added Tax Law, the Excise Duties and Tax Warehouses Law and the Corporate Income Tax Law. The proposed changes implement in the Bulgarian tax legislation the requirements of a number of EU directives, the provisions of which our country must transpose by the end of 2021. 

The draft Law amending and supplementing the Value Added Tax Law has been prepared in connection with the need to implement the provisions of Council Directive (EU) 2021/1159 of 13 July 2021 amending Directive 2006/112/EC as regards temporary exemptions on importations and on certain supplies, in response to the COVID-19 pandemic and Council Directive (EU) 2019/2235 of 16 December 2019 amending Directive 2006/112/EC on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence efforts within the Union framework. Provisions relating to the application of arrangements outside the Union, within the Union and distance sales of goods imported from third countries or territories have been clarified.

To address the consequences of the COVID-19 pandemic, the draft law proposes to extend the period of application of the reduced VAT rate of 9 percent on certain goods and services, i.e. until the end of the emergency epidemic situation on the territory of the Republic of Bulgaria. It also proposes to extend the range of foods suitable for babies or small children, to which the reduced rate applies.

The proposals set out in the draft Law amending and supplementing the Excise Duties and Tax Warehouses Law are in accordance with the following EU documents:

• Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty;
• Council Directive (EU) 2020/1151 of 29 July 2020 amending Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages;
• Council Directive (EU) 2019/2235 of 16 December 2019 amending Directive 2006/112/EC on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence efforts within the Union framework.

In order to increase legal certainty for economic operators, the provisions related to the regime of the exemptions for denatured alcohol are clarified.

The draft Law amending and supplementing the Corporate Income Tax Law transposes the provision of Article 9a of Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market. The implementation of the proposed amendments and supplements is expected to limit the possibilities for abuse and tax evasion, as well as to clarify the current provisions.

The transitional and final provisions of the bill also envisage changes in the Personal Income Tax Law (PITL).

Within the public consultation process, which lasts 30 days, stakeholders may send their opinions and proposals on the bills.