Bulgaria’s finance, health ministers clash on differentiated VAT

Written by on August 15, 2012 in Bulgaria, Business, News - No comments

Bulgaria’s Finance Minister Simeon Dyankov and Health Minister Dessislava Atanassova remain on opposite ends of the debate concerning the introduction of differentiated value-added tax on medicaments, as shown by statements over the past two days.

Atanassova, who took office in March and is the fourth health minister appointed in three years by Prime Minister Boiko Borissov, has been recently making waves with her statements that a separate VAT rate could be introduced on drugs as early as 2013.

Summer is, traditionally in Bulgaria, the period when the various ministries submit their budget proposals for the following year to the Finance Ministry, which then drafts the Budget bill in September.

Dyankov, who is also deputy Prime Minister overseeing the economy, has kept quiet on the issue until August 14, when he said that his ministry had no intention of introducing differentiated VAT rates. Currently, only the tourism sector enjoys a lower rate, of nine per cent, while all other goods and services are taxed at a rate of 20 per cent.

Introducing lower VAT rates on certain types of goods and services would open more opportunities for tax evasion, Dyankov said.

Appearing on the breakfast TV show of Nova Televisia channel, Atanassova refused to be cowed by Dyankov’s uncompromising stance. “The Cabinet has not yet discussed next year’s Budget, several laws will be amended, including the VAT Act, so I think that there is a chance that the VAT on drugs could be lowered,” she said.

(Finance Minister Simeon Dyankov, photo by Bulgarian Finance Ministry)

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