Банкеръ Weekly



The draft of a new law on excise duties, prepared and discussed at an expert level for more than a year now, was approved by the Council of Ministers on February 3. The legislative act, to be enforced as of January 1, 2006, will practically cause a mini-revolution in administrating the excise duty. As the BANKER weekly has already written, as of next year the Customs Agency will collect the excise duty not only when foreign goods are imported (as is the case now), but also when deals are effected within the country. This reform is not a whim of the rulers, but is one of the commitments, undertaken by the country in the pre-accession negotiations with the European Union (EU). The practice of customs officers administrating entirely the payment of excise duties has been introduced in all long-time EU members, with the exception of Sweden. The bill that will supersede the effective Excise Duties Act after its approval by the National Assembly, stipulates that as of 2006 excise duties will be charged on the production and sale of alcohol and spirits, tobacco and energy products, coffee and coffee extracts, tea and vehicles. Moreover, production and storage of spirits, energy products and coffee, will be allowed only in the so-called licensed excise warehouses.Permissions for such activities will be issued by the Customs Agency. This obligation is expected to further edge appetite towards the position of a director of the agency after the parliamentary elections in June. At the same time, the new authorities to be entrusted to customs officers, will somewhat soften the blow from the forthcoming lay-offs in the system. Customs Agency Director Assen Assenov has repeatedly said that part of the staff of customs and their departments at the borders with Greece and Romania (which are to be closed down after Bulgaria's accession to the EU) will undergo a training course and will be collecting the excise duties. The firms applying for a licence to run an excise warehouse will be demanded a registration as trade companies, to be not in insolvency procedures, and to have not liquidity, tax and health insurance liabilities. They should neither have punitive measures against them, imposing fines over BGN5,000 for a repeated violation of tax legislation. The firms applying for a licence for storage of excise duties (and not for their production) will have to prove they have registered and deposited capital of BGN500,000.Excise warehouse premises should meet certain safety and control requirements. They must be equipped with automated reporting systems that allow exercising real-time control over the raw materials and excisable goods produced and stored. When excisable goods are transported under a deferred payment regime, they will be accompanied by a document that helps for monitoring their quantity.The company owning the warehouse will only calculate excise duty on the products stored in it when they are sold to distributors. The excise payment to the budget will also be delayed when products are being transported from one excise warehouse to another.The new act will also regulate the activities of premises that provide conditions for distillation of alcoholic drinks and production of wine for personal consumption.One curious point in the draft is the introduction of differentiated excise rates on energy products - depending on whether they are used for household or industrial purposes. These plans caused excited discussions in Parliament when the tax laws and the 2005 Budget Act were discussed. Opposition members insisted that different excise rates be calculated for part of the fuels as of January 2005. Eventually, it was decided that the change would be made next year. The Deputy Minister of Finance Stamen Tassev commented for the BANKER weekly that introducing different rates will increase the households disposable income, on one hand, and enable frauds when fuels are declared to the customs, on the other. Stamping liquid fuels is one of the measures planned to guarantee more efficient control over these products taxation.

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