Банкеръ Weekly



The ruling circles' favourite sphere - high technologies - has been again given a leverage by the amendments to the Value Added Tax (VAT) Act. The export of software products shall be VAT-exempt. However, VAT shall not be paid only by firms that are members of licensed branch organisations, if the proceeds from the export are deposited in a local bank. Speaking on the matter Deputy Finance Minister Atanas Katsarchev said he was relying on the loyalty of companies from the branch. He explained to the BANKER weekly that he had a number of meetings with Bulgarian producers. The idea is to render local manufacturers competitive on the foreign market by operating in Bulgaria and not abroad. There was a similar regime until two years ago, but unscrupulous managers of companies took advantage of it. According to Mr. Katsarchev, huge amounts of money were then sourced out of the budget by evaluating a diskette at an outrageous price. Thus, the State had to pay great amounts of tax credit to VAT-pirates. For that reason, the former finance minister Muravey Radev eliminated that legislative loophole and for two years was not willing to hear anything about a relief of the export of software. It will become clear in a year if the amended article 14 of the VAT Act would become a malignant tumour for the State budget or would it accelerate the development of high technologies in Bulgaria. Firms from the branch have pawned their word that this would not happen, Mr. Katsarchev added. The Ministry will be working with one or two organizations; so it shall not allow unscrupulous firms to take advantage of that regime. When the firms are a few in number, they can be more easily controlled, Mr. Katsarchev is adamant. Moreover, the establishment of a guarantee fund is projected. It will be under the control of the taxation administration, and finances into it will come from the firms in the software branch.

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