Банкеръ Weekly

Briefs

BAD DEBTORS FLOP THE TREAURY IN FRONT OF IMF

By end-May 2002 the companies had accrued more than BGN400MN in overdue VAT liabilities, the Finance Ministry commented in its report on the taxation policy till the year 2005.The amount, that has been made public for the first time over the last few years, is suprpisingly big. Finance ministry officials point out that defaulted VAT payments are increasing by 50% each year, which is alarming. It is known that companies take the liberty not to remit this tax only in the last resort. This is so because in addition to the interest for delayed payment of VAT, a considerable fine was charged as well. Moreover, while it is possible to reschedule direct taxes, postponed payment of VAT is an exception.It is interesting that a slighly different picture was presenetd to the International Monetary Fund (IMF). Under the Memorandum on Economic Policy, signed with the IMF in February 2002, defaulted payment of taxes totaled BGN471.4MN in end-2001. The Government promised also that unpaid taxes would decrease by BGN25MN each quarter, i.e. they should amount to BGN421MN at present. But as default VAT liabilities alone are almost equal to the ceiling, agreed with the IMF, it turns out that the requirement for tax collection would be hardly fulfilled. Let's not forget that there are serious problems also regarding the regular receipts from excise duties, profit tax, and income tax.The situation concerning social insurance installments is not good either. Judging from the data, provided by the Head of the National Insurance Institute (NII) Yordan Hristoskov, unpaid insuranced have already reached BGN366MN, up from the BGN21MN in the end of 2001, as written in the memorandum with the IMF. Then a commitment was undertaken to reduce these debts by BGN10MN till the end of the first half of 2002, and by the same amount till December 31, 2002. But this has not been achieved so far.In this situation it is not strange that the NII and the taxaton authorities have recently initiated a series of measures against default taxpayers.

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