Bulgaria Asks EC to Keep Reduced Excise Rate on Natural Gas for Motor-Fuel Use

Bulgaria has sent a notification to the European Commission (EC) on the application of provisions of the EU Directive on the taxation of energy products and electricity under which it can apply a reduced excise tax rate on natural has used as motor fuel, according to Deputy Finance Minister Lyudmila Petkova.

Petkova, as cited by the Bulgarian Telegraph Agency (BTA), made clear that the EC was expected to come up with a positive response, adding in the case of a rejection, the excise tax rate on natural gas used as motor fuel would have to increase from BGN 0.85 to BGN 5.10 per gigajoule (GJ) in order to reach the EU minimum rate of EUR 2.6 per GJ.

She explained that the EU Directive provided that any EU member state with a share of less than 15% of natural gas of the total energy consumption by 2000 was eligible for an exemption from excise duty for natural gas.

The full of partial tax exemption was to be applied for a period of up to 10 years or until natural gas reached a share of 25% of the total consumption.

Petkova noted that although Bulgaria had taken advantage of the excise duty exemption for 10 years, data from Eurostat and the National Statistical Institute indicated that natural gas accounted for 10% of the total energy consumption, meaning that Bulgaria was entitled to ask the EC to apply a reduced excise duty rate.

She said that Bulgaria sought to keep the excise tax rate of BGN 0.85/GJ for six years, adding that the notification had been sent in August, while the EC was expected to come up with a response within two months.

She informed that the Finance Ministry had prepared amendments to the Excise Duties and Tax Warehouses Act envisaging an increase in the excise duty rate levied on natural gas used as motor fuel to BGN 5.10/GJ in case the EC failed green-light the measure by end-2013.

Petkova suggested that the legal amendments also provided for an increase in the excise tax levied on natural gas used as heating fuel from BGN 0.10/GJ to BGN O.6/GJ as well as an increase in the excise tax levied on heavy marine fuel from BGN 600 to BGN 645 per 1000kg.

She added that the Finance Ministry had also prepared a state aid scheme titled "Reduced Excise Duty Rate on Gas Oil Used in the Primary Production of Agricultural Products through a Fuel Voucher System" which had been approved by the EC back in 2011 and was in force by end-2013 but had never been enacted.

Petkova said that the Ministry of Agriculture and Food has asked the EC to extend the period for the application of the state aid scheme by end-2014.

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