Corporate Income Tax Act
The act amending the Corporate Income Tax Act was adopted on the 6th December 2022 by the Parliament. The main changes are the following:
- In article 167 are made amendments, which will come into force on the 1st January 2023. A new general requirement for corporation tax deferral is added. There will be no obligations when, as of December 31 of the respective year, the same are not reflected in the tax-insurance account or are not reflected as submitted for enforcement at the National Revenue Agency.
- taxable persons that cannot be provided with tax reliefs are taxable persons that operate in the sectors of transport, coal, brown coal, steelmaking, energy, synthetic fibers, fisheries and aquaculture, primary production, processing and marketing of agricultural products listed in Annex № 1 of the Treaty on the Functioning of the European Union for the respective activity.
- the state aid for regional development in the form of a concessional tax is provided for a project for an initial investment of a taxable person, which is a macro-, small or medium enterprise. As of January 1, 2023, the intangible assets included in the initial investment must be used only in the production site for which the aid is received, be included in the assets of the taxable person and remain connected to the initial investment project for a period of at least three years.Also, the tax relief can only be used if the adjusted amount of aid for regional aid for large investment projects, as defined in item 19 (3) of the Regional State Aid Guidelines (2021/C 153/01), is respected.
- there are amendments to some existing definitions and introduction of new definitions g. “steelmaking”, “airports”, “coal”, “brown coal”, “macro-, small or medium enterprise”, ‘synthetic fibers”, “fisheries and aquaculture”.
- The tax relief for which the Minister of Finance has notified the European Commission, representing state aid for regional development, enters into force after a positive decision by the European Commission regarding its compliance with the Regional State Aid Guidelines (2021/C 153/01).
Corporate tax for 2022 is waived if an application form is submitted between January 1, 2023 and May 31, 2023, and it is approved by the Bulgarian Investment Agency by June 30, 2023 if all the conditions of the law for the application of the tax relief have been met. Transfer of advance payments for corporate tax is not allowed until the date of the decision of the European Commission. After a positive decision by the European Commission, the Minister of Finance should not prepare individual notifications for taxable persons, with the exception of those carrying out large investment projects.
- The basis for determining the temporary solidarity contribution for individuals is determined according to Article 15 of Regulation (EU) 2022/1854 subject to the requirements for determining the tax profits for 2022 and for 2023 according to the Corporate Income Taxation Act. The four tax periods for the purposes of calculating the average value of taxable profits are 2018, 2019, 2020 and 2021. The temporary solidarity contribution is a public state claim that is subject to enforcement by a public bailiff under the Tax and Insurance Procedural Code.
- the tax relief, representing state aid for farmers, can also be used from January 1, 2023, subject to notification to the European Commission in accordance with current European legislation.
Value Added Tax Act
The following amendments have been made to the Value Added Tax Act:
- The tax rate of 9%, introduced in July 2022, imposed on those listed in Art. 66 of the VAT categories of goods and services will remain the same in 2023..
- As of July 2022, as we mentioned in one of our earlier articles from this year, every taxable person who is established on the territory of the country, with a taxable turnover of BGN 100,000 or more for a period no longer for the last 12 consecutive months before the current month, is obliged to submit an application for VAT registration within 7 days of the end of the tax period during which it reached this turnover..
Personal Income Tax Act
The amendments in Personal Income Tax are the following:
The tax reliefs for 2022 under Art. 22c and 22d of the Personal Income Tax Act can also be used by reducing the monthly tax base for income from employment relationships. For the months of October – December 2022, the tax reliefs are used when calculating the annual tax base according to the order of the Personal Income Tax Act. The employee chooses to apply the advance use of tax relief once by providing a written declaration to the employer. In cases of advance taxation under Personal Income Tax Act, tax reductions can be applied by reducing the amount of the advance tax due, provided that the other parent, respectively the other adoptive parent, relative or relative, will not use the advance reduction for the relevant tax year.