EY Bulgaria: Tax News: Changes in the Tax Legislation

In the past week, amendments to the tax legislation have been promulgated via the State Budget Act for 2023:

  • Targeted contributions for electricity
  • Value Added Tax Act (VATA)
  • Corporate Income Tax Act (CITA)
  • Tax and Social Insurance Procedures Code (TSIPC)
  • Excise Duties and Tax Warehouses Act
  • Personal Income Tax Act

We hereby present a summary of the most important amendments:

Targeted contributions for electricity:
  • The obligation to declare and pay targeted contributions to the Electricity System Security Fund by electricity producers and suppliers remains into force throughout 2023. Upon the introduction of this obligation at the end of last year, its application was expected to end on 30 June 2023. The revenue ceiling will be further determined by means of an act of the Council of Ministers.
Value Added Tax Act (VATA):
  • The rules concerning reduction of the tax base in case of a bad debt relief (more specifically whether the recipients of the supply have exercised their right to VAT credit) are further developed.
  • A new obligation to declare cash balances is introduced for persons registered under the VATA which are also enterprises within the meaning of the local Accountancy Act. In this regard:
    • The obligation will arise when, at the end of a calendar quarter, the total amount of cash available in the cash desks, the amount of receivables (also arising out of loans granted) from owners (natural persons), workers, employees, persons hired under management contract as well as sub-reporting persons, exceeds BGN 50,000.
    • The information should be reported in the declaration under Art. 55, para. 1 of the Personal Income Tax Act and Art. 201, para. 1 of the Corporate Income Tax Act.
    • The deadline for reporting is the end of the month following the respective quarter.
    • The first reporting period is the third quarter of 2023, with extended deadline until November 14, 2023.
Corporate Income Tax Act (CITA):
  • The possibility for food vouchers to be used for the payment of electricity, heating, natural gas, and water used for household needs and for activities carried out by cultural organizations remains in force.
  • A new option for issue of electronic food vouchers is introduced. Until June 30, 2024 these will be used in parallel with paper food vouchers while after this term only electronic vouchers will remain
Tax and Social Insurance Procedures Code (TSIPC):
  • An obligation for preliminary declaration of data for transport of goods with high fiscal risk is introduced (currently submission of such data under the TSIPC is under discretion). The obligation concerns transportation on the country’s road network, carried out by means of transport with a load capacity of more than 3.5 tons, where the preliminary declaration is to be done via an electronic service of the NRA, which generates an unique control number valid for 14 days. These changes concern the following persons – acquirer / transferor in a triangular operation, final recipient / first supplier in a chain of consecutive supplies of goods, supplier / seller and importer. Certain exceptions to the scope of the obligation are also available.
  • The obligation to submit a written declaration for the absence of outstanding enforceable obligations for taxes, duties, etc. with regards to the disposal of real estate and motor vehicles is renounced. Instead, a verification shall be carried out ex officio by a public notary.
  • It is envisaged that the interest for public receivables shall be time-barred upon the expiration of the terms for the main receivable, i.e., in the general case upon the expiration of approximately 5 years, not 3 years.
Excise Duties and Tax Warehouses Act:

• The scope of tobacco products includes two new products: nicotine-free e-cigarette liquids as well as nicotine-containing tobacco substitutes (packets/pouches) and provides for rules for their manufacturing, storage and distribution.
• An updated excise calendar for the period August 2023 – January 2026 is introduced with increased rates for the two new products as well as e-cigarette liquids containing nicotine (the latter were already included in the scope of tobacco products with the previous amendments in the EDTWA in force as of March 2023).
• Additional requirements are laid down in respect of excise exemption for energy products falling under CN codes 2707, 2710 and/or 2902 when used for purposes other than motor or heating fuel.
• Clarifications are introduced regarding the determination of the amount of collateral for certified consignees in case of transit movements of goods through EU countries as well as in relation to the excise duty reporting by local certified consignors who are also licensed warehouse keepers.
• Transitional provisions are included on already commenced procedures for reimbursement of excise duty for electricity under the repealed provisions in the EDTWA.

Personal Income Tax Act:

• The tax relief to be used by taxpayers with children (reduction of the annual tax base by BGN 6 000 / BGN 12 000 / BGN 18 000, respectively for 1 / 2 / 3 children) and with children with disabilities (reduction of the annual tax base by BGN 12 000) continue to apply throughout 2023. Both types can still be applied on a monthly basis by reducing the monthly tax base for employment income (reduction by BGN 500 / BGN 1 000 / BGN 1 500, respectively for 1 / 2 / 3 children and BGN 1 000 for a disabled child), as well as on a quarterly basis in case of advance taxation of income from other business activities and income from rent or from a grant of use of rights of property (reduction of the tax due quarterly by BGN 150 / BGN 300 / BGN 450 for 1 /2 / 3 children and BGN 300 for a disabled child).

For more information, please reach out to:
Milen Raikov, Partner Tax & Law, EY Bulgaria
[email protected]

Nevena Kovacheva, Partner Tax, Global Mobility, EY Bulgaria
[email protected]