VAT, customs systems adapt as Bulgaria joins the EU

Bulgaria’s entry into the European Union on January 1 2007 will mean that the country will join the EU VAT Information Exchange System (VIES).

At an October 1 seminar for journalists held at Slunchev Bryag (Sunny Beach) on the Black Sea coast, National Statistical Institute (NSI) and National Revenue Agency (NRA) officials gave a briefing on the procedures for Bulgarian trade with the rest of the EU.

VIES provides that intra-community supplies of goods are exempt from VAT in the member state from which they are sent, when they are made to a taxable person in another EU state who will account for the VAT on arrival.

In compliance with VIES, every Bulgarian VAT-registered company will get an identification number that will duplicate the present Bulstat number but with a BG prefix.

“VIES aims to prevent tax fraud in EU countries,” NRA head Maria Mourgina told journalists.

The system will check if imports declared by Bulgarian traders match the export information submitted by their partners elsewhere in the EU.

If there is a discrepancy, prosecutors, investigators and the police will step in, Mourgina said.

Mourgina said that after Bulgaria joined the EU, it was very likely to attract many fraudsters from other countries, seeking weak administrations with low clear-up rates and slow judicial proceedings. To respond to this, Bulgaria had to have a tax police that would not be subordinate to several departments and institutions, Mourgina said.

The date of January 1 2007 will bring other changes. From that, customs tax declarations filed by Bulgarian-registered companies will not apply to their trade with European Union member states. Instead, Bulgarian companies will have to file Intrastat tax declarations. Intrastat is a method of collecting information and producing statistics on exports and imports between EU countries.

A month ago, Bulgaria introduced a test run in compliance with the EU Intrastat system.

However, not every company will have to file Intrastat declarations on their EU import/export.

An Intrastat tax declaration will have to be filed only by companies with annual import/export volume flows over a specific rate, which would be defined by the NSI every October of the preceding year. For the remaining months of 2006, the NSI has these rates as 150 000 leva in dispatches and 75 000 leva in arrivals. The terms “dispatches and arrivals” will replace the terms “import/export” which, in theory, do not exist among EU member countries. For companies dealing with shipments below these rates, the declaration of the goods to and from other EU member states will be voluntarily, NSI officials said.

The Intrastat declaration will be filed with the NRA and will be a simplified version of the current one. A new element in Intrastat declarations will be a section where companies will have to specify where the goods were manufactured or bought and where they will be used. In addition, companies will have to keep e-diaries about their current shipments.

By the end of this year, all affected companies will receive letters with full information on their new obligations and the statutory framework governing the new statements.

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