Банкеръ Weekly

Briefs

SMALL PRODUCERS TO BE EXEMPT FROM PATENT TAX

The amendments to taxation legislation, proposed by the Finance Ministry, have not been approved by the Government yet due to discords among ministers regarding the tax rates. The Deputy Premier and Minister of Economy Lidiya Shouleva insisted that the Cabinet should observe its promise and reduce the corporate income tax from 23.5% to 20%, while the Finance Ministry proposes its rate to be 22 per cent. The biggest surprise in the propsal for amendments to the Natural Persons Income Taxation Act is the lack of any news. For the first time since the law was passed in 1997, nor changes in the taxation rates have been proposed. The retaining of the same scheme practically means that higher taxes will be paid on incomes, which have not in fact increased due to the inflation. There will be no significant change in the taxation of sole traders, although a proposal for levying a corporate tax on their incomes was also being discussed. The patent tax will undergo the most significant changes. In 2004 it will be paid by traders whose annual turnover is up to BGN50,000. Turnover means all sales in the previous year excluding VAT and excise duties. Currently, patent tax is charged from firms and craftsmen, whose turnover is up to BGN75,000. Another amendment, proposed by the Finance Ministry, is to extend the circle of persons who pay such a tax. Judging from the draft, patent tax will be also charged from owners of catering establishments with more than 100 seats, but producers of foods and other commodities will be exempt from it and will be paying taxes on their real profits. There are comparatively little changes in the tables for specifying the rate of the patent tax. It will drop by some 20% for repair services of electric household appliances and dry cleaning services will be paying 3-fold less than now.Regarding employees who draw a salary, the changes concern mainly the various compensations, paid by the employer. E.g. one of the ideas is that the compensation for a lay-off (which amounts to a month salary under the Labour Code) should no more be tax-exempt.A clear scheme for taxation of foreign athletes, scientists and people engaged in arts in Bulgaria, has been proposed for the first time. A 15% withholding tax has been stipulated both for them and for the dividends, paid to foreign citizens. The tax will be charged on the payment of the fee and should be deposited to the Treasury within 15 days. However, this won't apply to foreign athletes who live and work in Bulgaria. Under the Natural Persons Income Taxation Act, they are regarded as local persons and pay taxes like Bulgarian citizens.

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