Bulgaria's Finance Ministry to Present Tax Fraud Prevention Strategy

Finance | March 20, 2014, Thursday // 14:52|  views

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

Bulgaria's Finance Ministry is drafting a tax fraud prevention strategy in cooperation with other control authorities.

Speaking Thursday at a forum on counteracting tax fraud organized by the Bulgarian Academy of Sciences (BAS), Bulgarian Deputy Finance Minister Lyudmila Petkova said that the authorities had to identify the most efficient measures for counteracting illegal practices.

She explained that the measures would be developed in line with the different types of taxes and taxable persons.

Petkova, as cited by investor.bg, made clear that VAT fraud and smuggling of excise goods, including cigarettes, were the main reasons for the losses incurred by the state budget.

Bulgaria's Deputy Finance Minister drew attention to the fact that tax fraud mechanisms differed depending on the different categories of taxable persons.

She also noted that fraud schemes were also implemented with local taxes and fees.

To illustrate her point, Petkova said that an inspection of the database of the Sofia traffic police department (KAT) and the Sofia Municipality had shown that some 40% of the vehicles registered with KAT had gone untaxed and that there were also a number of undeclared buildings at the Sofia Municipality.

Petkova emphasized that the tax fraud prevention strategy would encompass state and local taxes and fees.

She reminded that a reverse VAT charging mechanism on grain and cereals and industrial crops had been introduced recently to prevent fraud.

Bulgaria's Deputy Finance Minister explained that the reverse VAT charging mechanism was a very efficient instrument but EU law did not allow for it to be applied for a wider range of goods.

She said that the mechanism would be applied by end-2015 and could be extended by 2018 following an analysis.

Petkova declared that the reverse VAT charging mechanism had really curbed fraud in supplies of cereals and industrial crops, adding that a number of other measures had been applied by the National Revenue Agency in order to prevent fraud schemes from being transferred to grain processing companies.

She stated that the monitoring of the circulation of high fiscal risk goods such as fruit and vegetables, meat, sugar, milk, etc, was another measure aimed at preventing tax fraud.

Bulgaria's Deputy Finance Minister said that the revenue authorities were authorized to stop trucks of over 3 tonnes and inspect the cargo and the accompanying documents.

She added that trucks could also be fitted with GPS seals to the site of delivery of the goods.

Petkova reminded that the Bulgarian Food Safety Agency, the Interior Ministry and the revenue authorities had carried out over 250 000 inspections at border crossing points and vegetable markets in the second half of 2013 and had uncovered a large number of irregularities.

Eleonora Nikolova, head of the Center for Prevention and Countering Corruption and Organized Crime (BORKOR) at the Council of Ministers, said that a new formula had been designed to calculate the risk of a public official committing fraud.

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Tags: Finance Ministry, Deputy Finance Minister Lyudmila Petkova, tax fraud, VAT fraud, excise goods, National Revenue Agency, Customs Agency


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