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Amendments in the Corporate Income Tax Act in 2021

By Act on amendment and supplement of the Value Added Tax Act, Corporate Income Tax Act (CITA) was published, which entered into force on 1 January of 2021.

Extended deadlines for declaring and paying of corporate tax

The deadline for submitting an annual tax return for the tax financial result and the due corporate tax is from 1 MARCH 1 to 30 JUNE.

The annual activity report shall be submitted within the same term.

The declared tax shall be paid by 30 June of the following year after deduction of the paid advance contributions for the respective year.

The tax on expenses, which is subject to declaration together with the annual tax return, shall be also paid by 30 JUNE of the following year.

It is important to note that the new deadlines for declaring and paying taxes are also applicable for 2020.

Amendments in the advance taxation with corporate tax

As a result of the extension of the deadline for declaring and paying corporate tax, several amendments have been introduced with regard to the advance contributions under CITA.

The occurrence of a liability for advance contributions for a given tax year, as well as their determination as monthly or quarterly, depends on the net sales revenue for the year preceding the previous year.

Advance contributions shall not be due by persons whose net sales revenues for the year before the previous year do not exceed BGN 300 000.

Monthly advance contributions shall be due by the persons whose net sales revenues for the year before the previous year exceed BGN 3 000 000. They shall be paid as follows:

  • for the months of January, February and March – by 15 April of the current calendar year (unchanged)
  • for the months from April to November – by the 15th day of the month to which they relate
  • for the month of December – by 1 December of the current calendar year

Quarterly advance contributions shall be due by tax liable persons who are not obliged to make monthly advance contributions. In particular, these are the persons whose net sales revenues for the year before the previous year are in the range from BGN 300 000,01 to BGN 3 000 000 inclusive. They shall be paid as follows:

  • for the first and second quarters – by the 15th day of the month following the quarter to which they relate (unchanged)
  • for the third quarter – by 1 December
  • for the four quarter no quarterly advance contribution shall be made (unchanged).

Given the change in the deadline for filing the annual tax return, the deadlines for declaring and paying the advance contributions are also amended. The same shall be declared with a separate new declaration by form from 1 March to 15 April of the same year.

The admissible excess of the corporate tax over the determined advance contributions is increased from 20 to 25 percent, in which case interest for delay shall be due.

Other amendments

  • A new subcategory to category IV for tax amortization assets has been introduced, for which a maximum tax amortization rate of up to 100 percent has been set – software or the right to use sales management software; computers, peripherals devices for them or mobile phones on which software is installed, included in the list under Art. 118, para 16 of the VAT Act.
  • The maximum amount of tax-free food vouchers has been increased from BGN 60 to BGN 80 per person per month.
  • A period of five years is provided – until 31 December 2025, during which the tax reliefs for profits from disposition of financial instruments shall be applicable to transactions with shares and stocks of collective investment schemes and national investment funds, stocks, rights and government securities executed on the growth market within the meaning of Art. 122, para 1 of the Markets in Financial Instruments Act.
  • The definition of the term “disposition of financial instruments” has been supplemented by adding transactions with stocks carried out on a third state market, which is considered equivalent of a regulated market and for which the European Commission has adopted a decision on the equivalence of the legal and supervisory regulations of the third state in accordance with current European legislation.

Thе present statement does not constitute legal advice or consultation, but rather our own interpretation and analysis of the issues outlined above.

If you have any questions or need clarification, please contact Dyulgerova&Penkova Law Firm team.