30.12.2015

"There are many persons that have tempted over time to organise their business in such a way that their whole life practically goes through the firm. This is not correct towards the ordinary citizens who are unable to register under the VAT law and to avail of tax deduction, and is, practically, stealing from them." This is what Minister of Finance Vladislav Goranov said for the morning programme of Nova TV. "There is no "weekend" tax; we are talking here about the system of value added tax and about restoring the justice in it. The VAT system does not change in practice." This is how the Minister of Finance commented on the new rules in the law that define the tax event and the tax base in such a way that when using value assets not only for the purposes of business activities but for personal purposes as well, the taxable person should be charged with VAT. Mr. Goranov explained that when those legal persons purchased substantial assets for which a huge amount of input VAT was deducted but which were not subsequently used for their business activities, they would thus defraud the revenues, steal VAT and run contrary to justice as far the other physical persons are concerned who were unable to avail of this system that foresees VAT deduction and refund.

Mr. Vladislav Goranov explained that even now the law stipulated that the persons using company assets for personal rather than business activities were obliged to pay VAT when using input VAT, and this was not something new but had existed since the first introduction of VAT in Bulgaria in 1993, i.e. when this type of tax was introduced by law. "We should call it VAT and should stop considering that VAT should be paid by the persons registered under the VAT Law. It is paid by the end user", he reminded. Asked about his expectations of the budget proceeds after the adoption of the new rules, Mr. Goranov answered that at least BGN 100 million would enter the budget just from the measures relating to personal use declarations after the tightening of the VAT regime. "With a low tax burden we do not have anything else to do but collect the maximum amount due by everybody along the chain", the Finance Minister wound up.

Asked to comment on the so-called "harmful food" tax, Minister Goranov reminded that such a solution did not have a fiscal goal and from this point of view no revenues from this tax had been planned. According to him, the idea of changing the consumer behaviour through the charging of new taxes was not indisputable and had some reservations of the ultimate effect of this change, the goals of which would probably fail to be attained. He vowed his concerns that the change would result in the smuggling of similar tax-free goods from the neighbouring countries and concluded that there would probably be no legislative decision about this type of tax.

Asked about fuel prices, Mr. Vladislav Goranov said that the investigation of a market cartel had not yet finished. "It strikes that the price levels in those several thousand retail-sale fuel sites across the country are pretty close. It also strikes that the rates of falling of raw material prices seem to lag behind the rates of dropping of end-user prices", said the Finance Minister. "The public gets the feeling that producer prices in Bulgaria are relatively high and today I do not have any arguments against this suspicion. There is what to do to clear up the suspicions of a tacit agreement for comparing prices and keeping them within a relatively narrow margin", he added and emphasised that this issue should be judged by the Commission for Protection of Competition.

In conclusion, the Minister of Finance also made a short forecast about the next year. According to him, if the country was not influenced adversely by some global processes going on in Europe and in the states neighbouring Europe, "we have real chances to start growing by rates that every Bulgarian citizen would be able to perceive", with the first ones to feel that being the officials that would have their salaries increased because of the Government's decision to increase the remuneration of the social assistance services, theatres, museums, education, as well as the minimum wage. "The analyses show that we have reasons to be moderate optimists that the stability, having been the main achievement of this Government so far, and the predictability will be effective", he added and assessed the higher consumption over the last couple of months, i.e. the people's bent for spending what they have earned instead of saving it, as the key to a higher birth rate. "For the first time since the crisis, for the first time since end-2008, we have an unemployment rate below 10% and expect it to continue dropping while the employment rate to continuing rising. All macroeconomic indicators make me feel optimistic", the Finance Minister wound up.