Mandatory VAT registration with a new threshold of BGN 100,000 from 01.01.2023
According to the legal framework in Bulgaria, until the beginning of 2023, upon reaching BGN 50,000 taxable turnover for a period not longer than the last 12 consecutive months before the current month, taxable persons were obliged to register under the Value Added Tax Act (VATA). The specified minimum threshold for mandatory VAT registration has not been changed for almost 20 years. In this period, the changes in socio-economic relations, the accumulation of inflation and the reduction of purchasing power had a significant impact.
Many of the enterprises in the conditions of economic uncertainty, reduced volume of activity, reduced solvency and increase in production costs continued to carry out their activities, meanwhile paying additional costs arising from their VAT registration.
The specifics of VAT are also taken into account in addition to the above-mentioned factors for changing the taxable turnover. One of the peculiarities of VAT is that its administration is carried out almost entirely by the taxable persons themselves. They carry out a kind of self-taxation through the monthly provision of information and declaration of data, which represents an additional administrative burden for these affected persons. This self-taxation requires VAT-registered persons to maintain significantly more complex accounting records, including keeping diaries, monthly preparation and submission of reports-declarations, more frequent audits, tax audits and others.
The above factors put the weaker and economically vulnerable enterprises to the test. With the adopted change, these enterprises are relieved of the additional regulatory and administrative burden in connection with the mandatory VAT registration regime. This is done by gradually increasing the minimum threshold of the taxable annual turnover, which as of January 1, 2023 has already been changed from BGN 50,000 to BGN 100,000. Despite the change, persons who do not meet the conditions for mandatory VAT registration and wish to register, will be entitled to register for VAT at their option.
