All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Bulgaria: Corporate Income Tax Act amendments related to scholarship donations

pechilkova-donka.jpg

Donka Pechilkova, Eurofast Global

New amendments to the Bulgarian Corporate Income Tax Act were adopted on August 2 2013. They mostly concern donations and more specifically donations in favour of students in secondary schools and/or universities carrying out their studies in an EU member state. The amendments will be effective from January 1 2014.

In accordance with the amendments, donations in the form of scholarships to students in a EU country will be recognised as expenses for tax purposes provided that certain requirements are met, while according to the previous text of the Act entities granting donations to students could decrease their profit with these grants, but only up to an amount not exceeding 10% of the profit for the financial year.

From January 1 2014, the requirements for the recognition of grants for tax purposes are stipulated in a separate new article (article 177a) of the Corporate Income Tax Act. The most important requirement is for the student to be enrolled in a secondary school or a university and the duration of the education course to be between 12 and 24 months. Furthermore, the student receiving the donation/scholarship must be in last two years of his/her educational course and the knowledge received must be of importance to and applicable to the entity grantor. Another important requirement is that the student, receiver of the scholarship is under 25 years of age. After graduation, the entity grantor is required to hire the student for a period not shorter than the period of the awarded scholarship. If the company does not hire the student or hires him/her for a shorter duration, that is if a scholarship was paid for a full year and the student was hired for six months after completing the studies, the grantor's profit will be raised by the amount corresponding to the remaining six months of scholarship to be taxed).

The amendments aim to stimulate scholarship donations by recognising the overall expense for tax purposes on one hand, and will motivate, on the other, young and educated people to return to Bulgaria, where they would apply the knowledge and abilities acquired abroad.

Donka Pechilkova (donka.pechilkova@eurofast.eu)

Eurofast Global, Sofia Office, Bulgaria

Tel: +359 2 988 69 78

Website: www.eurofast.eu

more across site & bottom lb ros

More from across our site

Vikas Garg talks to reporter Siqalane Taho about how regulation, technology and the goods and services tax has affected the manufacturing company.
A major shift is underway in tax as the profession transitions from a mostly accounting and finance sector to a hybrid industry that requires significant IT skills, say tax experts.
The Biden administration is about to give $80 billion to the Internal Revenue Service to enhance the tax authority’s enforcement processes and IT systems.
Audi, Porsche, and Kia say their US clients will face higher prices under the Inflation Reduction Act after the legislation axes an important tax credit for electric vehicle production.
This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree