08.08.2013

"The cash accounting scheme for VAT will help small and medium-sized enterprises having difficulties to pay VAT to the budget in the cases when they have not received any invoice payment from their clients for the supplies of goods and services they have made". This is what Deputy Minister of Finance Lyudmila Petkova said during the presentation of the project which introduces this scheme in our national legislation. Deputy Minister Petkova explained that this scheme was expected to reduce intercorporate indebtedness, improve the liquidity of SMEs, reduce the cases of tax fraud involving fictitious suppliers and fictitious transactions for wrongful VAT refund or understating the amount of the tax due.

The Ministry of Finance plans for this scheme to take effect as from 1 January 2014, with 220,000 VAT-registered companies expected to be able to choose to apply the new scheme. The companies making an annual turnover of up to EUR 500,000 or their equivalent will be able to select this scheme.

The introduction of this scheme into the national legislation will necessitate some amendments to the Value Added Tax Law and to the Rules Implementing the VAT Law. This scheme is applied in 20 EU members, while Belgium, Bulgaria, Greece, Denmark, Slovakia and the Czech Republic have not introduced it yet. Registration of the companies which will select to benefit from this scheme will be done by filing an electronic application form to the competent territorial office of NRA.