Банкеръ Weekly

Briefs

IN THE KITCHEN OF TAX LEGISLATION

It has already become clear that the assessments of estates for tax purposes may be raised by 50%, together with a decrease in the minimum and maximum rates of property taxes. The move will affect the calculation of inhabited house duties as well as garbage fees. According to experts of the Finance Ministry, in 2009 the municipalities will be in position to make full use of the options that the Government conferred to them at the end of 2007 and mainly to freely set the rate of these taxes having in mind only the maximum limits as described by the Local Taxes and Fees Act.
In case the National Assembly passes the changes to the respective legislative act, the taxation on immovable property will drop in the range of between 0.1% and 0.2% of the tax assessment (against 0.15% and 0.3% as the rates are in 2008). Up to the moment local authorities have not show intentions to raise these fees.
Changes to the taxation of donated items and inherited estates are also envisaged. The tax-free threshold will fall more than threefold from BGN250,000 to BGN70,000. There is a partial compensation here, too, which means the tax rates are expected to be decreased, too. Inheritance from brothers and sisters will bear a tax burden of between 0.4% and 0.8% for inherited item of above BGN70,000 in place of the present 0.7% to 1.4% for inheritances of above BGN250,000, while for all other cases the tax rates will drop to 3.3% and 6.6%, down from the present 5% to 10%. Ancestral property directly succeeded from parents will not be taxed, but otherwise most of the people will pay taxes for inheritances.
Corporate profits from deals in securities on EU stock exchanges will not be taxed, which will make the status of such dealings equal to that of the transactions on the Bulgarian Stock Exchange.
In order to meet the European Union's requirements for free movement of goods and capitals, there will be no taxes also on income from interests on deposits and other accounts in commercial banks of the EU member states as well as in branches of other banks based in the European Union or such from the European Economic Area.
Again because of the commitments undertaken with respect to the Community, there will be another jump in the excise duty rates as of 2008 and the prices of cigarettes will further rise. In 2010, a pack of the cheapest cigarettes will cost between BGN3.10 and BGN3.50, in case the European Commission accepts the proposal for doubling the minimum excise duty rates. As it turned out at a seminar organised by the Finance Ministry, Brussels insists that the minimum excise duty rate on cigarettes should reach EUR64 per 1,000 pieces. It is expected this rate to increase locally to BGN47 per 1,000 pieces for 2009 plus 37% of the end price.
The changes to the tax legislation envisage also duty free imports of goods of up to EUR300. They can enter the country in people's handbags and no VAT or duties will be dye for them. Untaxable threshold is now EUR100. In case people travel by air or sea, the amount will be even higher - BGN430. The quantity of cigarettes and alcohol that can be imported free of charges remains the same - 200 cigarettes, four litres of wine, 16 litres of beer and one litre of beverages with higher alcoholic content.
Representatives of the Finance Ministry clarified that the value of different goods for customs purposes are calculated per person and cannot be borne by two or more passengers travelling together. The other thing is that if you buy a computer for more EUR500, the whole sum will be taxed and not only the amount by which it exceeds the untaxable threshold.
Finance Minister Plamen Oresharski, said that direct taxes should not be further decreased and the country's draft budget bill for the next year has been prepared on the basis of their present rates.

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