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Published for a public discussion is a draft of an Act for amending and supplementing the Tax and social securities procedures code, introduced by the Ministry of Finance. A number of amendments of the tax laws are envisaged, however, the most significant proposal is the introduction of solidarity contribution of 33%.
The solidarity contribution is introduced as one-off temporary measure, due by all market participants (with small exceptions) and which would be payable in parallel with the corporate tax.
The contribution shall be due for surplus profits of the entities, carrying out business activity, gained in the second half of 2023, i.e., from 1 July 2023 till 31 December 2023.
The contribution’s rate would be 33%. The basis for its assessment shall be the so-called surplus profits defined as the positive difference between the tax profit for the second half of 2023 and 50% of the average tax profits for the years 2018, 2019, 2020 and 2021, increased by 20%. Alternative methods for determining the tax profit for 2023 are proposed.
It is envisaged that the liable persons shall declare the contribution within the due timelines for filing 2023 annual tax return. However, liable persons shall declare advance contributions by 15 July 2023 and pay them by the 15th of the respective month.
It should be noted that incorrect calculation of the solidarity contribution or of the advance contributions in a smaller amount is subject to penalty of up to BGN 30 000 (approx. EUR 15,340) and interest for late payment.
It is envisaged that the solidarity contribution shall not be deductible for corporate tax purposes.
If the said measure is adopted, the following shall be observed:
- Preliminary assessment of the existence of a contribution liability.
- Determining advance contributions’ amount.
- Declaring and timely submission of advance contributions.
- Final recalculation of solidarity contributions in accordance with the different possible approaches and their effect on corporate income tax.
Our team will keep you updated with further developments on this matter.
EY Bulgaria team
Summary
If you require additional information, please contact:
Milen Raikov - milen.raikov@bg.ey.com
Viktoriya Mancheva - Viktoriya.Mancheva@bg.ey.com