Банкеръ Weekly



Self-employed doctors and notaries with fair incomes who have hired assistants will not make a mistake if they haste to register firms of their own. This piece of advice is based on the draft amendments to the Natural Persons Income Taxation Act. Under the bill, circulated by the National Council on Taxation Policies this week, these persons shall no longer be allowed to calculate their taxes in compliance with the Corporate Income Taxation Act.So far self-employed doctors and notaries could decide by themselves if they would calculate their taxes under the Natural Persons Income Taxation Act (like those practising other liberal professions) or if they would apply the regulations for calculating their profit in compliance with the Corporate Income Taxation Act (like sole traders). In some cases there might be no significant differences between the two kinds of taxation bases.The Natural Persons Income Taxation Act stipulates that the gross income is liable to taxation after deducting from it the amount of paid social and health insurances and the normatively acknowledged expenditures. For liberal professions the acknowledged expenditures are 35% and no increase is projected. If the taxation basis in formed in accordance with the provisions of the Corporate Income Taxation Act, the self-employed doctors and notaries deduct the real expenditures, which are obviously higher than 35% of the proceeds when they are practising in rented offices and have hired staff. Of course these some disadvantages here too - for example the need of book-keeping or the lump-sum payment of a tax on the expenses for petrol when the car is not used for business purposes only. One way or the other, in the furture this category of professionals will be obliged to register at least as sole traders if they want to deduct their expenditures prior taxation. In fact, this will be more advantageous to those of them, whose monthly income after deduction of expenses doen not exceed BGN1,000. For higher incomes, the 23.5% taxation rate projected for next year under the Corporate Income Taxation Act, will be more advantageous.In this connection we'll recall that the most important amendment to the Natural Persons Income Taxation Act will be the reduction of taxation rates. However, as the BANKER weekly wrote four months ago, this won't have a significant effect on higher incomes. The taxation rate for lower incomes will go down from 18% to 15 per cent.The draft bill for amendments to the Natural Persons Income Taxation Act does not stipulate any other new provisions except the widely discussed changes in the patent tax. It is worth noting, however, that the most recent draft of the bill does not project any amendments regarding wholesale storehouses. The Finance Ministry initially intended to relieve them from patent taxation.

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