Bulgarian MPs passed on September 15 amendments to the Corporate Tax Act that require employers to pay a tax on company-owned goods if they are used by employees for personal purpose outside work. Dubbed the “weekend tax” by media reports, this is the second such tax imposed by Parliament in 2016.
Earlier this year, legislative amendments required companies to pay a similar tax, as part of their VAT declarations, on goods purchased using tax credits. The new tax is set at a flat rate of 10 per cent, but the tax base will not be the entire value of the asset, only the value used for personal purposes.
Menda Stoyanova, head of Parliament’s budget committee, said that it was simpler to apply the new tax as part of the corporate taxes paid by companies, as opposed to requiring employees to pay its as part of their annual income tax declarations.
Stoyanova said that companies will have a choice whether to pay the tax with the rest of their corporate tax, or as additional employee income, but in the latter case, they would also have to pay mandatory retirement and health contributions on the additional non-monetary income derived by their employees from using company goods.
The tax will apply retroactively, starting January 1 2016 – an issue that stirred controversy and debate during discussions in the budget committee last week, when opposition MPs indicated that they could file a formal complaint with the Constitutional Court.
Bulgaria’s constitution stipulates that tax changes cannot be applied retroactively, but Stoyanova said that the new tax would not pose an issue because the corporate taxes for this year are due to be paid by the end of March 2017.
The tax will apply to three categories of assets – real estate, company-owned vehicles and other goods, which would include company-owned laptops and mobile phones. Goods from this last category are presumed to have dual use, with employers given the option to automatically count 20 per cent of the good’s value as being used for personal purposes, Bulgarian National Radio reported.
According to news website Mediapool.bg, the Finance Ministry has collected only six million leva from the “weekend tax” in the first half of the year, out of 100 million leva targeted for 2016.
(Photo: Darren Shaw/sxc.hu)