On 13 March 2020, the Bulgarian National Assembly declared a State of National Emergency in Bulgaria for a period of one month (ending on 13 April 2020 but subject to potential additional extension) as a response to the rapid spread of the COVID-19 virus. To strengthen the legal framework governing the measures to be implemented, on 23 March 2020 the National Assembly adopted the Measures and Actions during the State of Emergency, declared with a Resolution by the National Assembly on 13 March 2020 Act (the "State of Emergency Act"), promulgated in the State Gazette on 24 March 2020.
The State of Emergency Act envisages, among others, the following tax and financial reporting measures aiming to mitigate the negative implications of the COVID-19 crisis for businesses:
EMERGENCY TAX MEASURES
The State of Emergency Act provides for certain amendments to the Bulgarian tax legislation entering into force on 24 March 2020 and aiming to ensure the taxpayers' compliance with their statutory tax obligations in view of the state of national emergency.
- The deadline for submission of the corporate income tax ("CIT") returns for 2019 and payment of the CIT and tax on expenses due, is extended from 31 March 2020 to 30 June 2020;
- Businesses liable for advance CIT instalments based on their estimated profits for 2020 which have not filed their annual CIT returns for 2019 by 15 April 2020 must submit a CIT return by this date, completing only the section outlining the advance CIT instalments due for 2020. The rest of the annual CIT reporting may be performed under a separate CIT return filing by 30 June 2020;
- Companies which have submitted their annual CIT returns for 2019 (including an advance CIT instalments estimation for 2020) by 15 April 2020 will not be required to perform separate filings for CIT compliance purposes;
- The deadline for submission of the personal income tax ("PIT") returns for 2019 and payment of the PIT due by individuals performing commercial activities, including registered sole traders and farmers, is extended from 30 April 2020 to 30 June 2020. The deadline for PIT return filing and payment with 5% discount for these categories of taxpayers is extended from 31 March 2020 to 31 May 2020.
- No extension is provided for all other individuals liable to submit annual PIT returns for 2019, thus they should perform their PIT filings and pay the tax due by 30 April 2020. In order to be entitled to a 5% discount from the PIT due, these taxpayers must complete the tax filing and payment by 31 March 2020.
- Taxpayers which by 30 June 2020 have pre-paid the whole annual amount of the local property tax and local tax on the owned motor vehicles due for 2020, will be entitled to 5% discount.
- The VAT, withholding tax and payroll tax compliance obligations of businesses shall remain unchanged during the state of emergency.
Tax limitation periods and procedures
- The 10-year absolute limitation period which precludes assessment and collection of tax liabilities regardless of any former cessations and/or suspensions of the limitation period, will not apply. The general 5-year tax limitation period shall remain in force but shall be suspended for the period of the state of national emergency.
- No tax enforcement proceedings shall be initiated. Exceptions are admissible in a limited number of cases i.e. where this is required for the protection of overriding public interests, or where a delay in enforcement may result in unenforceability of the public liabilities and/or significant damages.
- All pending tax enforcement proceedings shall be suspended. Enforcement upon certain types of assets (e.g., bank deposits and other receivables) shall be admissible upon the debtor's request.
- The tax check and tax audit procedures, including the deadlines for their completion, shall remain unaffected by the state of emergency.
The State of Emergency Act also sets out the following extensions to the deadlines for publication of financial information for 2019 by businesses:
- The deadline for submission of declarations for inactivity by companies which have not performed business activity during 2019 to the Bulgarian Commercial Register (or by other means, as applicable), is extended from 31 March 2020 to 30 June 2020.
- The deadline for publication of the Annual Financial Statements ("AFS") for 2019 with the Commercial Register (or by other means, as applicable), is extended from 30 June 2020 to 30 September 2020, where the AFS may also be signed via electronic signature. These measures aim to further facilitate the financial filings for 2019, in addition to the recent legislative amendments which introduced reduced documentary requirements for approval of the AFS of small and medium enterprises operating in Bulgaria.