Банкеръ Weekly



The Government's reluctance to exempt from insurance installments and taxes the amounts which employers decide to allocate to their workers in the form of vouchers for food, has rendered very doubtful the introduction of that system as of the beginning of next year (as per the provisions of the Coprorate Income Taxation Act). The tax, to be paid by the employees on the vouchers they get, is in fact not so much an occasion for scepticism. The problem is that currently there is no readiness for the introduction of the voucher system. That kind of a tax relief for the employers was approved a year ago by amendments to the Coprorate Income Taxation Act. On the proposal of Konstantin Trenchev, Chairman of the Podkrepa Labour Confederation, the MPs then agreed to exempt employers from a one-time tax on the amounts, allocated by vouchers worth up to BGN40 per worker a month. The introduction of that tax relief was postponed by a year in order to work out regulations for its mechanism. Otherwise, employers have to pay a one-time 20% tax on their social expenses (e.g. the maintenance costs for canteens). While justifying his proposal in front of the parliamentary Budget Commission Mr. Trenchev pointed out there were big international companies, specialized in that activities, which were ready to operate in Bulgaria. They would undertake the printing of vouchers, control their use, and organize the settlement of payments. However, the provisions of the respective regulations approved in July 2003 do not clearly specify if the operator should be a a printing establishment or just an issuer of the vouchers, which would close a contract with one of printing houses, licensed by the Finance Ministry to print securities. The most important requirement to the operators is to have and equity capital of at elast BGN2MN and to have VAT registration. The vouchers should have at least five protections and that seems to be the major criterion in the choice of operators. The voucher system is not a complex one. The operators supply the vouchers to the employers who pay their par value through a transfer to a special ank account. The operators also close contracts with groceries, restaurants and fast-food catering establishments, that will accept vouchers. The employees, possessing vouchers of a specific operator, are entitled to shop only from the stores with which the operator has contracts. Traders (which should also be registered under VAT) are not allowed to give back change in cash against the voucher or to sell alchoholic drinks and cigarettes against that paper. They submit the gathered vouchers to the operator who should encash them within 20 days. The vouchers will be valid for 12 months, but the employer may ask from the operator to exchnage them with new ones. A month prior the start of the voucher system it is not yet known who would have the right to print these securities. The regulations on the activity of operators stipulates that each August a tender should be held for the choice of operators. For that purpose the Finance Minister should had set up a committee, but suddenly in end-September the regulations were changed and the term for its firnal approval was cancelled. No competition for operators has been invited so far and it is not known if a date for it will be fixed till the year-end.No amendments to the VAT Act in connection with the voucher system have been projected yet, and in this case there are many questions regarding the way for imposing VAT. About two weeks ago the Finance Minister Milen Velchev replied to an inquiry of an MP that the system will start operating in due time. However, syndicates do not believe it. According to them, no employer would be willing to use vouchers if insurance installments should be paid on them. The Finance Ministry's major argument against the excessive care for the people is connected with the deficit in the budget for social insurance. According to Mr. Velchev's team, the exemption of vouchers from insurance installments will add another BGN15MN to the deficit of the National Insurance Institute (NII). These calculations have been based on the assumption that 100,000 employees get vouchers next year. The syndicates call that number in question. According to them the users of vocuhers will be twice less in number. In fact, the size of the relief does not only depend on the firms' willingness to provide pay-free food to their employees. The regulations stipulate that the Finance Minister should be setting on a yearly basis the par value of printed vouchers, to be distributed between the operators.

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