From Today: VAT on Bread, Flour, and Restaurant Services Restored to 20% in Bulgaria
Society | January 1, 2025, Wednesday // 13:05| views
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As of today, the VAT rate on bread, flour, and restaurant services has been restored to 20%. The lower rates, which had been reduced as part of anti-crisis measures during the COVID-19 pandemic, had been in effect for several consecutive years. These tax breaks were initially introduced to alleviate the impact of the pandemic but expired at the end of 2024. While businesses in the bakery and restaurant industries have strongly opposed the change, the measure had been expected to come to an end as per the current legislation.
The government’s decision to bring back the higher VAT rate is expected to generate an estimated 400 million leva for the state treasury. The Ministry of Finance had already stated that there would be no extension of the reduced VAT measures. Finance Minister Lyudmila Petkova emphasized that preferential tax rates could lead to higher administrative burdens and the potential for tax evasion.
Despite the fact that restaurants have returned to pre-pandemic turnover levels, the reduced VAT rate remained in place for them. Business owners in the hospitality sector have been benefiting from these preferential rates, which were reflected in the final prices paid by consumers. The legislation was clear that the preferential VAT rates would end by the close of 2024, which has now come to fruition.
In the past, former Finance Minister Assen Vassilev had proposed returning the VAT rate to 20%, but his proposals were rejected by GERB and DPS in the 50th National Assembly. Ultimately, the lawmakers decided that the preferential VAT rates for restaurants and bread would be abolished after the year-end, with the final provisions also ensuring that the markup on bread would not exceed 15%.
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