Банкеръ Weekly

Briefs

TAX AUTHORITIES QUELL UNSCRUPULOUS MONEY-CHANGERS

Change bureaux will go between the cogs of the state machine in less than a month. As of February 1, 2005, the new requirements of the Finance Ministry's Ordinance No 4, regulating the operation of exchange bureaux, will become effective. Strict restrictions about the exchange rates at which they are allowed to sell forex will be imposed on money-changers. They will not be able to deviate from BNB's reference (recommended) exchange rate for the respective day by more than 20 per cent. The aim is to restrict in that way potential opportunities for frauds. Presently, there are no restrictions regarding the exchange rates at which money-changers can buy and sell foreign currency. The only requirement is that if they differ by more than 10% from BNB's reference rate, the deal should be documented by a contract for purchase and sale of currency. According to amendments to Ordinance No 4, to be enforced as of February 1, the mandatory signing of a contract will be eliminates and the deal of exchanging foreign currency in cash shall be regarded as closed by accepting the cash and signing the statement of account or the expanded fiscal bond.Swindlers usually take advantage of people's ignorance or inattention when they sign documents, tax authorities explain. According to them, it is a frequent practice for the client to sign a document in which the price at which he has exchanged or purchased foreign currency has not been written. Tax authorities have also received complaints from citizens for faking their signatures. Investigations of such cases are going on, but the conclusion from the practice so far regarding frauds by exchange bureaux is that the signing of contracts does not scare violators. Therefore, restrictions for selling and buying exchange rate had to be included in Ordinance No 4. If they are violated, the closed exchange deal is regarded invalid. The second amendment to the regulation is connected with the way in which exchange rates should be written on the boards in exchange bureaux. As of February 1 they should be written by a whole number and two digits after the decimal sign. In the areas of border check-points both selling and buying exchange rate should be announced on the boards, and the exchange bureaux may not refuse to exchange either foreign currency or Bulgarian levs. These amendments are aimed at restricting frauds, experts from the Operational Control department of the Chief Tax Directorate, explain. Often, unscrupulous money-changers add as if by negligence one more digit in the buying rate for the euro and instead of 1.954 they write it as 1.195. After February 1 the fraud by adding the digit 1 after the decimal point will be more easily seen, as according to Ordinance No 4 the digits after the decimal sign will be two instead of three as is the case now. And when the board says that 1EUR is exchanged for BGN1.19, this disadvantageous exchange rate will be more easily observed than when the board says 1EUR is exchanged for BGN1.195.The new regulation also obliges money-changers to place visibly the information about the exchange rates for the day in Bulgarian, English, German, French and Russian, and in other languages at the discretion of the exchange bureau. And when it is in the areas of border check-points, the information about the exchange rates should be written also in the language of the bordering country. These requirements, however, won't be obligatory for exchange bureaux in hotels. According to tax authorities, frauds at exchange bureaux are seasonal and occur mainly in summer, mostly along the Bulgarian Black Sea coast. In 2004 experts from the Operational Control department made inspections of exchange bureaux, mainly after complaints by citizens. The most numerous violations were established in big towns. Thus, six exchange bureaux in Bourgas were closed for four months due to frequent violations, another 50 in Bourgas and Sunny Beach were shut down for 24 hours. The same punitive measure was applied to 30 exchange bureaux in Sofia. The most severe sanction, stipulated in the Currency Act, is to deprive a company of its registration certificate due to grave and continuous violations, the experts from the Chief Tax Administration explain. In 2005 they will continue to strictly control the operation of exchange bureaux and will be uncompromising towards those who violate the regulations. As until now, exchange bureaux will be at a registration regime at the Financial Intelligence Agency (FIA) with the Finance Ministry. By the end 2004 a total of 541 firms were registered in the country, which have the right to operate exchange bureaux. The agency says that 308 trade companies dropped officially and the most frequent reason was incomplete documentation. After getting the necessary documents, the companies could again apply for registration, FIA specifies.

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