Bulgaria's Govt Mulls New Tax Incentives for Investors in Regions with High UnemploymentBusiness | September 24, 2013, Tuesday // 15:47| views
Bulgaria's Deputy Finance Minister Lyudmila Petkova, photo by BGNES
Investors in Bulgarian municipalities where the unemployment rate is 25% higher that the country average will enjoy incentives under the Corporate Income Taxation Act under a package of proposed tax changes presented by Deputy Finance Minister Lyudmila Petkova at a Tuesday sitting of the National Council for Tripartite Cooperation.
Petkova, as cited by investor.bg, explained that the current legal regime also provided tax incentives but the regulations had to be improved because they had failed to bring about a decrease in the unemployment rate in these areas.
Under existing tax laws, investors receive tax incentives for production activity in municipalities where the unemployment rate is 35% higher than the average for the country.
Apart from the requirement for production activity in such municipalities, the new regime will also provide requirements for a certain number of employees, a part of whom will have to live in the respective municipality.
The proposal is part of the set of tax changes drafted by the Finance Ministry aimed at stimulating investment activity and employment and supporting certain sectors of the economy.
The set of tax changes also envisages a reduced excise tax rate for gas oil for agricultural purposes through a fuel voucher system. This state aid scheme will be open to around 75 000 farmers. It will be available to both agricultural workers and livestock breeders. The vouchers will be handed out by the State Fund Agriculture and the farmers will have to submit declarations in advance on the anticipated fuel consumption in 2014. The total amount of the state aid is BGN 70 M.
The Finance Ministry also proposes the revocation of the preferential treatment given to young families with a mortgage due to discrimination disputes.
The government also plans to adopt an environmentally-friendly approach to taxation as regards greenhouse gas emissions from cars. For Euro 3 and Euro 4 vehicles, the tax rate will be reduced by 30% and for Euro 5 and Euro 6 cars the tax rate will be reduced by 50%.
In a bid to increase budget revenues, the government plans to introduce fiscal control over the movement of goods carrying a high fiscal risk, mainly fast-moving consumer goods like meat, sugar, fruit and vegetables, etc. The oversight, which will be the responsibility of the National Revenue Agency (NRA) on Bulgarian territory, will mostly cover the transportation of such goods. The measure aims to prevent the evasion of VAT and other taxes through tax fraud schemes. The NRA will draw up lists on an annual basis of the high fiscal risk goods on the basis of tax fraud schemes established through inspections and audits. Mobile NRA units will have the right to stop vehicles and check the documents for the goods they are carrying. If the vehicle is carrying high fiscal risk items, it will be equipped with a seal, an ordinary one or a seal with a GPS, which will allow the authorities to keep track of the movement of goods.
The set of measures also envisages the so-called reverse-VAT charging on grains and technical crops in a bid to combat tax fraud and reduce unfair competition in the sector.
Among the proposals for reducing red-tape are changes to the so-called single account for payment of taxes and mandatory social security contributions. Under one proposal, the principal will be paid first and then the interest on the overdue obligations.
Self-insured persons will be given the opportunity to choose whether to pay taxes or social security contributions in order to not lose their social security rights. The opportunity to choose was revoked with the introduction of the single account at the beginning of the year.
Social security declarations # 1 and #6 will be united and will be submitted simultaneously.
The changes also envisage a simplified regime for a deferred payment of tax and social security obligations in the case of temporary financial difficulties. The aim is to help the business sector pay current and overdue obligations and keep functioning.
The proposed set of changes also envisages the introduction of a VAT cash accounting mechanism. The regime, which will not be mandatory, requires companies meeting certain conditions to transfer the due VAT into the state budget only after receiving payment for the supplies they made. According to estimates of Bulgaria's Finance Ministry, the mechanism will be open to 220 000 companies registered for VAT. The government believes that the mechanism will reduce intercompany indebtedness and increase liquidity at small and middle-sized enterprises. This mechanism will also be available to companies with an annual turnover of up to EUR 500 000 which have no unsecured obligations to the state budget. The VAT cash accounting mechanism is expected to help curb tax fraud schemes implemented through fake documents and fictitious suppliers.
In the case of a deferred payment of excise duty on excise goods, the requested collateral is to be reduced. The amount of the collateral for the goods kept in the tax warehouse, which carry no risk of non-payment of excise duty, is to be reduced from 30% to 20%.
We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!