20.03.2014

We are developing a strategy on prevention and fight against tax fraud by type of tax, wherein all institutions that could be effective in the process will be involved, Deputy Minister of Finance Lyudmila Petkova stated at a round-table discussion on Risk Analysis Methodology for Tax Fraud and Tax Evasion, organized by the Centre for Prevention and Countering Corruption and Organized Crime and the Economic Research Institute of the Bulgarian Academy of Science. Petkova added that the major problem with tax fraud found through amended assessments by the National Revenue Agency was collection of funds. The Deputy Minister of Finance specified that therefore the measures being taken from mid last year to reduce tax fraud were of preventive nature. Thus when there is risk of a tax liability not to be collected actions are taken in advance to prevent tax evasion or fraud. Among the measures taken last year are the reverse charge of VAT mechanism for cereals and industrial crops, and the fiscal control over risk goods. Petkova added that the use of both mechanisms related not only to achieving fiscal effect and reducing tax fraud, but also to protecting Bulgarian producers from unfair competition.

Petkova commented also the expansion of the reverse charge of VAT mechanism which was among the most effective ones for tax fraud prevention because the unlawfully changed tax could not be refunded. The Deputy Minister specified that the measure was introduced by a European Directive only for specific types of goods. If a Member State wishes to apply it for another type of goods it has to prove that all other mechanisms for fraud prevention have been exhausted. The request itself is derogation from EU legislation. Following an EC opinion on the request, the request is considered at European Council level and then it has to be approved by all EU Member States.

This year two new laws are also being drafted - on excises and tax warehouses and on local taxes and fees, Petkova specified. It has been found that both legislative acts lack means to prevent and fight against fraud. Regarding the Law on Local Taxes and Fees a working group will be set up with the participation of representatives of the Ministry of Finance (MoF), the National Association of Municipalities in the Republic of Bulgaria and employer organisations. According to Petkova the objective of the changes is to introduce provisions that will support the municipalities in local taxes and fees collection. On the other hand measures will also be proposed to prevent non-payment of local taxes because there are data for evasion of property taxes - on real estate, road tax, etc. Regarding the Law on Excise Duties and Tax Warehouses a working group has already been set up wherein experts from the MoF and the Customs Agency and representatives of sector organisations participate, Deputy Minister Lyudmila Petkova added.