PARLIAMENTARY MISTAKE ENRAGES TAX AUTHORITIES
A mistake made by MPs during the second reading of the Natural Persons Income Taxation Act was about to deprive the budget of revenues worth BGN55MN. This is the amount of the annual patent tax revenues that could have been lost because of an accidentally adopted privilege. Unintentionally, the MPs supported one of the three proposals made by the United Democratic Forces (UDF) - to relieve people who pay the tax in question. The surprising vote was mostly due to Rositsa Totkova who persisted in defending each proposal of the right wing and insisted that they be reviewed one by one. She hoped the rulers would like at least one of them. Her tactics brought results, when repeated voting of the proposal for privileges to those paying patent tax was demanded. Obviously, that confused the MPs and the UDF option was supported by 77 deputies - just two more than those who voted against it.Still, rulers and their advisers coped with the extraordinary situation and later accepted that the regulation would enter into force no sooner than January 1, 2005. Until then, it will definitely be canceled.The unintentionally adopted text is quite imperfect and would have created serious problems. It stipulates that the annual patent tax due by people who have made investments during the year is to be reduced by an amount equal to 10% of the investments in fixed assets, yet not exceeding the annual amount of the tax.That changes the definition of the patent tax which is a final tax and makes it something else, commented Nikolay Popov, Chief Tax Director. There is no definition of the term investment in fixed assets, and most patent dealers either fail to keep accounting of their activities, or keep single entry (they have no balance-sheet and it is impossible to establish what kind of fixed assets they own). How this investment will be proved did not become clear, either. Since no limits are provided, the privilege would be used for every acquisition that a trader is able to prove with documents.Moreover, the right to acknowledge 10% of the expenses on a house or a car means that every capable trader would be able to avoid making any payments to the State. What is curious in the whole story is the fact that representatives of the majority appeared powerless in the voting, while the opposition's proposals have obviously been written with the belief that they would not be approved.