KPMG's Tax News outline and highlight legislative changes and trends in the area of tax.
The eleventh issue of Tax News comments on the key amendments to the Act to Amend the Excise Duty and Tax Warehouses Act (AAEDTWA) which has been adopted at second reading and promulgated.
Issue 92 of the State Gazette dated 27 November 2015 promulgates the text of the Act to Amend the Excise Duty and Tax Warehouses Act (AAEDTWA) adopted at second hearing. Below we present the key amendments to the AAEDTWA which will enter into force as of 1 January 2016.
Amendments to existing definitions and introduction of new definitions
In addition to the amendments to the definition of “energy product used for heating purposes” (discussed in detail in the tenth issue of Tax News), the AAEDTWA introduces amendments to other definitions as well as completely new definitions, e.g.: “licensed warehousekeeper”, “specialized small distillery”, “ethers derived from bioethanol”, “legally and economically independent specialized small distillery site”, “energy from renewable sources”, “unsettled public liabilities”, “majority partner or shareholder”.
Excise duty rates
The amendments provide for a significant increase in the rates for certain energy products used for heating purposes. The aim of the increased rates is to prevent the improper use of heavy and marked fuels as motor fuel instead of fuel for heating purposes.
The AAEDTWA also provides for a change in the excise duty rates applicable to cigarettes.
Combined production of heating and electrical energy
The amendments provide that in case of combined production of heating and electrical energy (the so called “co-generation”) excise duty is due for the produced heating energy. The tax base in this case is equal to 30% of the total amount of energy products used during the combined production. The end users exempt from excise duty (EUEED) will also be required to submit a monthly report for the energy products used during the combined production in compliance with procedures to be additionally determined in the Regulation for Application of the EDTWA.
Pursuant to the AAEDTWA, the following persons will be subject to mandatory registration:
Within a two-month period from the entry into force of the AAEDTWA, the aforementioned persons are to submit requests for registration.
The AAEDTWA provides for exemption from excise duty of lubricants in packages of up to 5 liters (currently 3 liters) while the movement of such goods from another EU Member State to Bulgaria in quantities between 5 and 210 liters will be performed under a simplified clearance procedure.
Sales in a tax warehouse
New provisions are introduced aiming to strengthen the administrative control in cases of ownership transfer over excise duty goods within a tax warehouse. In cases of such transactions which do not constitute “release for consumption” under the regulations of the EDTWA, the depositor will be obliged to file a notification to the National Revenue Agency (NRA) and the warehousekeeper within a three-day term prior to the transfer of ownership to the new depositor.
Terms for excise duty refund
Pursuant to the AAEDTWA, the excise duty is to be refunded within 7 days from the entry into force of the respective act for reimbursement. Prior to the changes, this period was 14 days.
The terms for reimbursement of excise duty on electricity are shortened and the head of the competent customs office will be obliged to reply within a two-month period (instead of three months) from the date of submission of the refund claim. It should be noted that the reimbursement will continue to be effected on the basis of a written claim which is to be submitted no later than 30 April of the year following the year of the electricity consumption.
Denatured ethyl alcohol
The AAEDTWA provides for an excise duty exemption for persons who use in their activities ethyl alcohol denatured under a specific method and the ethyl alcohol is used for the manufacture of end products not for human consumption. Under the current provisions of the EDTWA, such excise duty is initially paid and subsequently reimbursed. Pursuant to the AAEDTWA, a separate certificate for EUEED is to be issued for each site whereby ethyl alcohol denatured by means of a specific method is delivered to and used. A transitional regime is provided under certain hypotheses.
The AAEDTWA sets out other amendments which, inter alia, include:
Assistance by KPMG in Bulgaria
Taking into consideration that the amendments to the EDTWA will come into force as of 1 January 2016, the tax liable persons under the EDTWA face a short term to analyze the effects of the changes and make their activities compliant with the new rules. In this regard, professionals from the Tax practice of KPMG in Bulgaria could assist you in examining the amendments discussed above as well as other changes provided for in the AAEDTWA, assessing the effects that these changes could have on your activities and preparing an action plan.
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