3. The VAT system in Bulgaria

3.2 The tax payers

Read article 3.4.5

VAT can be levied exclusively by the so-called registered persons (art 13-15 VATA), i.e. legal or physical persons registered for collection of VAT.

A business can become a registered person after going though a special registration procedure.  Some businesses are obliged to register themselves, while other have the right to do so but registration is not compulsory for them.

The reason for this differentiation stems from 

The VAT registration in Bulgaria is separate from the general tax registration.  However, it is not possible for a person to registered for VAT without having a general tax registration (tax number, files, ...)

Only businesses which have a taxable annual turnover of over 75.000 levs (this sum is called a threshold) are obliged to register themselves.  It should be noted that due to the high inflation in 1994 (130%) and in 1996, the real value of this sum has been substantially eroded and now the pragmatism principle is put on trial, with many relatively small enterprises having a turnover above the threshold.

The taxable turnover is calculated as a sum of the values of all taxable deals, performed by the person in question in the 12 months preceding the current month.  The taxable income thus changes each month and has to be recalculated.

If it does not exceed 75.000 levs, the person is not obliged to register.

However, some persons which are not obliged to register may choose to do do in order to benefit from the rights which a the statute of a registered person carries (e.g. all exporters will register in order to get the tax credit granted).

VAT registration with a taxable annual turnover of less than 50.000 levs is not possible.

Non-registered persons cannot levy VAT, even if they execute taxable deals.

The main obligation of a VAT registered person is to levy VAT on their customers, to collect the tax and to transfer the proceeds to the state budget.

The main right of the registered persons is to demand a reimbursement from the tax authorities of the VAT paid to:

The right for reimbursement exists only if the goods and services for which the VAT has been paid, have been used in the business activity of the registered person (i.e. for taxable and export deals).

Under business activity the VATA puts the activities performed by traders or trade activities of other persons, as defined in art. 1 of the Trade Act'91.

It is possible for a registered person to cancel its registration under some specific conditions: