Банкеръ Weekly

Briefs

PROFIT TAX VOTING GOES PERFECT

The voting of draft amendments to the Corporate Income Taxation Act ended in favour of the parliamentary majority of the National Movement Simeon II (NMSII) and the Movement for Rights and Freedom (MRF) and the group of Novoto Vreme. A draft bill proposed by the Government, as well as two drafts proposed by Novoto Vreme were adopted on first reading. Draft amendments to the Corporate Income Taxation Act, proposed by the Union of Democratic Forces (UDF) and the Bulgarian Socialist Party (BSP) were rejected.The fragile parliamentary majority, as described by the Minister of Finance Milen Velchev, demonstrated that it could be united when it had to adopt regulations of significant importance to the taxpayers. This time the majority did not make the mistakes that allowed several amendments to the value-added tax and income tax acts proposed by the opposition to pass through the Parliament. Last week everyone was embarrassed when, along with the Government drafts, the opposition and part of Novoto Vreme brought forward amendments for a 2% reduction of VAT - from 20 to 18%, and for introduction of a structured value-added tax. The Government proposed that the tax on profit rate fall from 19.5% to 15% from January 1, 2005. According to calculations of the experts of the Ministry of Finance, that will save the business BGN13.5MN that could be used for investments, new jobs and other projects instead. Another significant amendment to the tax on profit act is the raise of the amortization rate for new machines and production equipment from 30 to 50 per cent. The tax rate on donations and social expenses will be reduced from 20 to 17%, too.Moreover, the Parliament adopted two drafts proposed by the group of Novoto Vreme. One of them stipulates that the tax on dividends be cut from 15 to 7 per cent. Besides, the financial results of the companies will be reduced by the expenses made for research and scientific activities.The other draft brought forward by Novoto Vreme allows that the financial result be reduced before it is transformed for tax purposes by the money spent for donations to schools and universities.

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