Over 6,000 businesses Charged Incorrect VAT Rates, Causing Significant Budget Losses
In a startling revelation, more than 6,000 businesses were found to be charging a 9% value added tax (VAT) rate rather of the mandated 20% after 1 January 2025. This discrepancy was uncovered by the National Revenue Agency (NRA) during its routine monitoring and analysis of data collected from traders’ fiscal devices through a continuous remote connection.The fiscal devices in these commercial establishments issued a staggering 631,391 fiscal receipts for sales in the first week of the new year. These receipts recorded turnovers with the incorrect VAT rate, resulting in a financial loss to the budget exceeding 1 million BGN.
According to the transitional and final provisions of the Value Added Tax Act, the reduced VAT rate of 9% was applicable only until 31 December 2024. this rate was specifically for restaurant and catering services, including the delivery of prepared or unprepared food and the sale of packaged takeaway meals.
The NRA has taken swift action to address the issue. Traders have been informed via letters about the need to correct their fiscal devices to comply with the law. Additionally, they will receive phone calls from the revenue agency with detailed instructions to rectify the discrepancies before penalties are imposed for the violations.
Key Points at a Glance
| Aspect | Details |
|————————–|—————————————————————————–|
| Number of Businesses | over 6,000 |
| Incorrect VAT Rate | 9% instead of 20% |
| Fiscal Receipts Issued | 631,391 |
| Budget Loss | Over 1 million BGN |
| Corrective Measures | letters and phone calls from NRA to traders for necessary corrections |
This incident underscores the importance of accurate reporting and compliance in financial transactions. Businesses are urged to review their fiscal systems to avoid similar errors and potential penalties in the future.
Stay informed and ensure your business adheres to the latest tax regulations to safeguard both your operations and the national budget.
Headline:
VAT Mismanagement Uncovered: A Deep Dive into Bulgaria’s 6,000+ Affected Businesses wiht Tax Expert,proximotax.bg CEO, Dimitar Georgiev
Introduction:
In an unprecedented revelation, over 6,000 Bulgarian businesses were recently found to be charging an incorrect 9% VAT rate rather of the mandated 20%, leading to notable budget losses. to shed light on this staggering incident, Senior Editor of world-today-news.com, Alex Petrov, sits down with Dimitar Georgiev, CEO of leading tax consultancy firm proximotax.bg, to discuss the implications, causes, and preventative measures for such errors.
Alex Petrov (AP): Dimitar, thank you for joining us today. What are your initial thoughts on this VAT miscalculation involving over 6,000 businesses?
Dimitar Georgiev (DG): Hi Alex, thanks for having me. I must say, this is a worrying situation. The sheer number of affected businesses and the substantial budget loss highlight the importance of accurate tax reporting and compliance.
AP: Could you explain how such a widespread mistake could have occurred? Was it a technical glitch, or somthing else?
DG: Well, Alex, it’s to early to point fingers, but from what we’ve seen, it seems like a combination of factors. Many businesses may not have updated their fiscal devices to reflect the VAT rate change as of 1 January 2025. Additionally,some may have relied on incorrect or outdated data regarding the VAT rate applicable to their services.
AP: Speaking of which,the incorrect 9% rate was specific to restaurant and catering services. How did other businesses get entangled in this?
DG: That’s a good question, Alex. While the 9% rate was indeed meant for restaurant and catering services, some businesses may have misinterpreted the rules or been influenced by changes in their supply chain. For instance, some may have starting delivering prepared food, thinking that allows them to charge the lower VAT rate.
AP: The National Revenue Agency (NRA) has acted swiftly, notifying businesses and providing instructions for rectification. How should these businesses proceed?
DG: I’m glad to see the NRA taking prompt action. Businesses should definitely follow the instructions provided by the NRA. They should review and update their fiscal devices,ensure their accounting records reflect the correct VAT rate,and redress any incorrectly issued VAT receipts. They should also take this as a lesson and invest more time and resources into understanding the tax regulations relevant to their operations.
AP: Dimitar, many businesses rely on automated systems for their financial transactions. Could these systems be more robust to prevent such errors in the future?
DG: absolutely, Alex. While automation brings numerous benefits, it’s crucial that these systems are regularly updated and equipped to handle changes in taxation policies. Businesses should also implement robust controls to periodically verify and update their internal systems.
AP: what advice would you give to businesses to ensure they remain tax-compliant and avoid such pitfalls in the future?
DG: first, stay informed about changes in tax laws and regulations. Second, invest in reliable accounting and tax compliance software. Third, conduct regular audits of your systems and records to ensure accuracy. And lastly, always consult professionals when in doubt. A small investment in expert advice can save businesses significant time, money, and stress in the long run.
AP: Wise words indeed, Dimitar. Thank you for joining us today and sharing your expertise on this crucial matter.
DG: My pleasure, Alex. It’s crucial that businesses, especially small and medium enterprises, are educated about their tax obligations to contribute to a healthy national economy.
