This section of issue 2 of KPMG’s Tax News for 2018 summarizes the main amendments to the Excise Duties and Tax Warehouses Act (EDTWA) as promulgated in the State Gazette, issue 98 dated 27 November 2018, entering into force effective as from 1 January 2019, except for certain provisions which have a different entry-into-force date.
Release for consumption and joint liability
The amendments introduce a new hypothesis of release of excise goods for consumption, namely, when energy products are used for purposes other than those for which exemption or refund of excise duty is applicable.
Under these circumstances, there is a joint liability for the excise obligations for the person who has used the energy products as well as for the licenced warehousekeeper who has released the goods for consumption without charging excise duty provided that the latter knew or should have known that the conditions for exemption would not be met.
In the cases of excise refunds, the joint liability extends to the person who has consumed the energy products and the person who has received the refund of excise duty if the latter knew or should have known that the conditions for refund would not be met.
Excise duty exemption
A specific restriction from the excise exemption is introduced. It concerns energy products used in an excise warehouse for the production of other energy products whereby the latter are not ultimately intended to be used as a motor or heating fuel. This amendment reflects judgment C-49/17 (Koppers Denmark ApS) of the Court of Justice of the European Union (CJEU) where the Court concludes that the excise taxation of intermediate products is permissible iftheir non-taxation during the initial production stage would not be compensated by a subsequent taxation of the finally produced energy products due to the fact that the latter are not used as motor or heating fuels.
The scope of the excise exemption is extended to energy products with CN codes 2711 12 11 to 2711 19 00 (propane, butane, ethylene, propylene and other) up to 5 kg in packages as per the Consumer Protection Act.
Cancellation of incorrectly submitted requests, references and statements for excise labels
The amendments provide for the possibility to cancel or deactivate incorrectly submitted requests, references and statements for excise labels considering that such legal possibility was not available so far in the EDTWA. The cancellation can be made after the tax payer submits a written request to the head of the competent customs office.
The new provisions also introduce a procedure for amendment of inconsistencies in filed requests for excise labels or for returning of excise labels.
Advertising and trading with excise goods
New rules and restrictions are introduced concerning the trade with excise goods, including via the Internet, as well as their distribution throughout the postal network. The amendments aim to limit the illegal supplies of excise goods (mainly alcohol products) for which no excise duty has been paid and without affixed excise labels.
In this respect, the publication of advertisements and announcements, including online, offering excise goods, is prohibited. The prohibition is not applicable for dealers offering alcoholic drinks via online stores as per § 1, item 87 of the Additional Provisions of the VAT Act provided that the goods are with excise labels or the excise duty has already been paid.
The definition for “smoking tobacco” in the EDTWA is amended. Furthermore, the changes in the Tobacco and Tobacco Related Products Act introduce a new requirement as of 20 May 2019 for inclusion of unique identificators on the consumer packages of cigarettes and smoking tobacco sold on the Bulgarian market.
The provision for determining the taxable base of beer, including flavoured beer, is specified as the amount of hectolitres per degrees Plato of the original gravity. The amended rule corresponds to judgment С-30/17 (Kompania Piwowarska S.A. w Poznaniu) of the CJEU. According to this judgment, for the purposes of determining the basis of flavoured beers when using the Plato scale, only the dry extract of the original wort is to be taken into consideration, without taking into account aromatic substances and sugar syrup added after the fermentation process.
There are new provisions regarding the payment of excise duty in cases where the payment is made by a person, other than the tax liable person, as well as in the event of suspension of a licence for a tax warehouse.
Specific requirements are introduced in relation to the storage containers used by licenced warehousekeepers for petroleum and/or petroleum derived products in accordance with the Act for Administrative Regulation of Economic Activities Related to Petroleum and Petroleum Derived Products.
The new legislation amends the provisions for obtaining a licence for a tax warehouse and suspension of such license as well as for the certificates for independent small breweries, specialized small distilleries and small wine-production facilities.
New legal provisions are set regarding the possibility of the customs authorities to seal premises for a certain period.
There are clarifications regarding the deadlines for issuing excise documents including upon release for consumption of bottled liquefied petroleum gas (LPG) used for heating and in the cases of shortages of excise labels.
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