Legal Update, November 2013, by KLC Law firm
I. SECTOR: Taxes
1. Tax-Insurance Procedure Code
The amendments related to Art. 169 of the Tax and Social-Security Procedure Code (TSPC) aim to improve the single unified account for payment of taxes and obligatory social security contributions and to support payers in temporary financial difficulty. The amendments provide an opportunity to repay first the principal amounts for taxes and social security contributions which have expired. This shall stop the accrual of interest and shall prevent the accumulation of new liabilities.
In the final provisions of the bill, amendments were adopted to the Value Added Tax Act (VATA).
The changes in VATA are made in connection with Directive 2013/43/ES of 22 July 2013 amending Directive 2006/112/EC on the common system of value added tax as regards the optional and temporary application of the reverse charge mechanism in relation to supplies of certain goods and services susceptible to fraud. The directive allows Member States to apply this mechanism up to the end of 2018.
2. Income Taxes on Natural Persons Act
The Law on amending the Income Taxes on Natural Persons Act aims to extend the tax relief for young families.
It provides the possibility for foreign individuals who are resident, for tax purposes, in a Member – State of the European Union or in another country – party to the Agreement on the European Economic Area, to benefit from the proposed taxed relief for young families.
6. Article 46 creates a new para. 4, which sets the rate of tax on income under Art. 38, para. 13 – income acquired by local individuals connected with interest on deposit accounts with commercial banks, namely:
1. eight percent – for income received in 2014;
2 . six percent – for income received in 2015;
3 . four percent – for income received in 2016;
4 . zero percent – for income received in 2017 and subsequent years."
3. Corporate Income Taxation Act
Recent changes promulgated in the State Gazette No. 100/2013 concern provisions on the recognition of income and expenses from revaluation and from write-off of receivables and tax treatment of obligations, recognition of costs which constitute income of local individuals, exemption of certain income of foreign legal entities originating in the Republic of Bulgaria, as well as the tax withheld on income of foreign legal entities in connection with interest, and copyright and performance royalties received.
4. Excise Duty and Tax Warehouses Act
The main changes to the draft Law on amending the Excise Duty and Tax Warehouses Act (EDTWA) are in connection with an increase in excise duty on natural gas used as motor fuel and heating oil, as well as heavy fuel oil. The proposals are related to the requirements of Directive 2003/96/EC of the European Union restructuring the Community framework for the taxation of energy products and electricity and the commitment to the Treaty of Accession to the European Union on the increase in excise duties to reach the minimum level of the Community.
Amendments were made to Art. 104 in relation to the powers of customs authorities as revenue authorities in proceedings under Art. 77 and 78 of the Tax and Social-Security Procedure Code (TSPC) – in cases of proceedings connected with termination, transfer, conversion, liquidation and bankruptcy of a company, the taxable persons should also notify the customs authorities.
5. Value Added Tax Act
The amendments to the Value Added Tax Act (VATA) are in connection with the need to harmonize the Bulgarian tax legislation with the EU directives and decisions of the European Court of Justice in the area of indirect taxation, as well as to refine the provisions that create difficulties in the practical application of the law.
6. Local Taxes and Fees Act
An option is provided for tax relief for taxes on vehicles in the Republic of Bulgaria to be dependent on the environmental standards in relation to emission standards of greenhouse gases.
As of 2015, it will not be the task of the municipalities to collect municipal waste tax in an amount determined on the base of the assessed tax value of real property, its balance value or market price.