Bulgaria Mulls Reverse-Charge VAT Mechanism in Grain Trade

Finance | August 1, 2013, Thursday // 19:42|  views

Bulgaria's Deputy Finance Minister Lyudmila Petkova, photo by BGNES

Bulgaria's government will focus efforts on curbing VAT fraud which drains the state coffers of around BGN 1 B a year, according to Lyudmila Petkova, Deputy Finance Minister.

Petkova, as cited by the Bulgarian Telegraph Agency (BTA), made clear Thursday that the work of the Customs Agency and the National Revenue Agency was being analyzed to shed light on the pace of collection.

She also explained that the Finance Ministry planned to introduce the so-called reverse-charge VAT mechanism, i.e. the tax is owed by the recipient of the goods, in grain trade in a bid to stem fraud schemes.

Petkova noted that the analyses of the Finance Ministry had indicated that the large-scale fraud schemes were most often implemented in the grain trade sector.

Former Bulgarian Finance Minister Simeon Djankov was also a proponent of reverse-charge VAT, but the mechanism was never applied during his term in office, according to mediapool.bg.

Petkova explained Thursday that Bulgaria had asked the EC to implement the mechanism last year but never got a response. She noted, however that the changes to the EU VAT Directive had made the step possible.

She informed that the introduction of the mechanism required amendments to the VAT Act and the Grain Storage and Trade Act, adding that the changes were expected to be approved by end-September and to enter into force in October.

Bulgaria's Deputy Finance Minister specified that the impact of the measure would be discernible by end-2013.

She said that the number of fake invoices issued by non-existent entities as part of VAT draining schemes was expected to fall, while the competitive environment in the sector was expected to improve and the number of intermediaries in the commercial chain was to shrink.

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Tags: finance minister, Simeon Djankov, VAT, VAT Act, VAT draining, VAT fraud, National Revenue Agency, Customs Agency, grain traders, EC


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