Банкеръ Weekly

Briefs

TAX BREAKS STIPULATED FOR THE INSURED

In 2005 citizens will be able to use tax breaks if they pay instalments for voluntary pension insurance, voluntary insurance against unemployment, and voluntary healthcare insurance. The same preference has been projected for premiums under the Life and Rent and Life insurances for a term of at least 10 years. Instalments made for them throughout the year could be deducted from the tax base, but not more than 10% of the taxable income. That is stipulated in the latest draft for amendments to the Natural Persons Income Taxation Act, approved by Parliament on November 16. As until now, next year the tax will be calculated if the citizen draws the money from his pension, healthcare or life insurance, but the rate will be lower than presently. The MPs decided that the drawn money would be taxed by 16% instead of the present 20 per cent. But if the citizen waits for the term of maturity, fixed in the respective contract, he will pay to the Treasury 12% on the drawn money. Presently, that rate is 15 per cent. The citizens will feel the effect of family income taxation only in 2006, although it will be introduced as of January 1, 2005 as per the deputies' decision. The reason lies in the specific way of using its extras. The law stipulates that from the total amount of the annual taxable sum of one of the parents BGN360 will be deducted if the family has one child, BGN780 - for two children, and BGN1,140 - for three and more children. That means that the sums won't be deducted each month but only once a year. According to Deputy Finance Minister Stamen Tassev, the principle that will be introduced as of 2005 is applied in most European countries.

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