Changes to the Corporate Income Taxation Act have been published in the State Gazette issue No 94 of 30 November 2013 and will come into force from 1 January 2013. 

This includes significant changes to advance payments of corporate income tax (CIT).

Calculating advance payments

Advance payments must be made on the basis of the forecast taxable profit for the current year, instead of the previous years’ results.

Persons liable to make advance payments

The net sales threshold exemption from advance payments is increased from BGN 200,000 to BGN 300,000; however, even if the threshold is not reached, 3-month advance payments may be made voluntarily.

Monthly advance payments are due where the net sales reported for the preceding year exceed BGN 3,000,000.  Those having net sales between 300,000 and 3,000,000 must make 3-month advance payments.

Declaration of advance payments due

Advance payments for the previous year must be declared in the CIT return.  Advance payments for 2013 must be declared in the CIT return for 2012.

The amount of advance payments can be increased or reduced by separate declaration.

Penalty interest

Penalty interest (equal to statutory interest) accrues till 31 December on the surplus where:

  • annual CIT exceeds by more than 20 % the total amount of monthly advance payments;
  • 75% of the annual CIT exceeds by more than 20 % the amount of the determined 3-month advance payments for the relevant year.

Payment of advance payments

Monthly advance payments must be paid not later than 15 April for January to April and not later than the 15th day of each month thereafter.

The 3-month advance payments must be paid not later than:

  • 15 April for the first quarter
  • 15 July for the second quarter
  • 15 December for the third quarter

No advance payment is due for the last quarter.

Other significant amendments

Non-deductible expenses for CIT purposes

Bribery expenses (concerning local as well as foreign officials) will not be recognised for CIT purposes, nor will income related to such bribery expenses.  This makes the CIT Act compliant with the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation for Further Combating Bribery.

Correction of errors

The tax administration (not the taxable entity by self-assessment) will be responsible for correcting accounting or ‘tax’ (in adjusting the financial result for CIT purposes) errors for previous years.

Declaring and paying withholding tax

Payers of income of non-resident legal entities that are subject to withholding tax must make quarterly declarations of the withholding tax due (not only paid) by the end of the month after the relevant quarter.  Declarations of withholding tax due but not paid up to 31 December 2012 must be submitted by 31 July 2013. 

Any withholding tax withheld and paid up to 31 December 2012 must be declared under the previous rules.

When income subject to withholding tax has accrued, the tax must be paid:

  • by the end of the month after the quarter in which a resolution was adopted to distribute dividends/liquidation quota
  • by the end of the month after the quarter in which the income accrued - for other kinds of income.

Amended terms for payment of some taxes

Taxes on expenses, income taxes for budgetary entities and tonnage taxes all become annual taxes and are payable by 31 March of the following year.