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Bulgaria amends VAT Law to combat fraud

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A recent amendment to the Bulgarian VAT Law introduces a new obligation for traders that aims to tackle fraud.

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Petar Varbanov

The changes to the VAT Act introduce a mechanism whereby liquid fuel traders will have to provide the competent territorial directorate of the National Revenue Agency collateral in cash, government securities or an unconditional and irrevocable bank guarantee, each of which is valid for a period of one year. The types of liquid fuels for which such collateral is required include natural gas, gasoline, heavy fuel oil, kerosene, liquefied petroleum gas and other gaseous hydrocarbons.

According to Art. 176c, para 1 of the VAT Act, the obligation to provide collateral arises when the taxable person has made in the current tax period taxable supplies of liquid fuels, as follows:

1) Supplied liquid fuels exceeding BGN 25,000 ($14,000) per month;

2) Has performed an intra-community acquisition of liquid fuels, which are not intended for consumption by the person that has performed the acquisition, with a total value exceeding BGN 25,000; and

3) Has received liquid fuels, released for consumption under Art. 20, para 2, pt 1 of the Excise Duties and Tax Warehouses Act ( EDTWA ) worth over BGN 25,000, if no basis has arisen for collateral on other grounds. In this case, it is irrelevant whether the received liquid fuels are intended for consumption by the receiver.

The collateral, which must equal 20% of the VAT base of the supplies, but not less than BGN 50,000, can be provided by taxpayers as:

  • Collateral in cash;

  • Collateral in government securities; or

  • Collateral in an unconditional and irrevocable bank guarantee.

The collaterals are provided by filing an application in the respective tax office as per the registration of the company. The application, depending on the type of collateral, should be accompanied by various documents. Failure to provide the collateral will lead to sanctions with penalties.

Petar Varbanov (petar.varbanov@eurofast.eu)

Eurofast Bulgaria Office

Direct tel: +359 2 988 69 75

Website: www.eurofast.eu

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