Ruling issued by NRA for application of the Act on the Measures and Actions During the State of Emergency

On 31 March 2020 the National Revenue Agency (NRA) published on its website an Internet Ruling No 20-00-54 from 27 March 2020 for application of the Act on the Measures and Actions during the State of Emergency (AMASE) declared by means of a decision of the National Assembly dated 13 March 2020 (State Gazette No 28 from 24 March 2020) (the Ruling), containing clarifications regarding the way of determining the deadlines under the Tax and Social Proceedings Act (TSSPA) and the material tax acts in the conditions of state of emergency in the country.

In §49 of the promulgated AMASE it is regulated that the deadlines and proceedings for establishing, declaring, payment, securing and collection of liabilities for customs duties, taxes, including excise duties, mandatory social security and health insurance contributions, state and municipal charges and other public receivables, regulated in the Tax and Social Proceedings Act, Customs Act, the Excise duties and Tax Warehouses Act, Value Added Tax Act, Corporate Income Taxation Act, Individuals’ Income Taxes Act, Local Taxes and Charges Act, Social Security Code, Health Insurance Act and Gambling Act do not change, with the exception of the cases under § 25 – 31 of the Transitional and Conclusive Provisions of AMASE. More information regarding the deadlines changed with the cited legal provisions of AMASE may be found in our publication of 25 March 2020 in the column“See further details on….” on www.afa.bg.

As far as the provision of § 49 of AMASE is too general, many questions remain open regarding the deadlines and conditions of the proceedings for establishing of liabilities for taxes and social securities, for declaring and payment of these liabilities, as well as regarding the proceedings for securing and collection of public receivables.

With regard to the above, NRA issues the Ruling and clarifies the deadlines of the proceedings, which remain unchanged, and the legal procedures for exercising rights and fulfillment of obligations.

The deadlines and the conditions for execution of the following proceedings remain unchanged

1) Proceedings related to registration and declaring of liabilities to the state budget

• The terms for fulfillment of obligations for obligatory registration and deregistration under the Value Added Tax Act and for submission of VAT returns and VIES declarations, as well as Intrastat declarations to NRA remain unchanged.

• The deadline for submission to NRA of quarterly declaration for the taxes due under Art. 201 of the Corporate Income Taxation Act (CITA) and Art. 55 of the Individuals’ Income Taxes Act (IITA) by enterprises – payers of income and self-insured individuals in their capacity of payers of income, does not change and expires until the end of the month following the calendar quarter. The taxes due for the first quarter of 2020 shall be declared under Art. 201 CITA and Art. 55 IITA not later than 30 April 2020.

• The deadline for withholding and payment of advance income tax due on employment income is not changed (it remains 25-th day of the following month) and the term for withholding and payment of advance tax on income from business activity, rental income or other provision for use of rights or property against consideration, or income from other sources remains unchanged (until the end of the month following the calendar quarter – for the first quarter of 2020 the deadline for the payment of advance income tax in the above cases expires on 30 April 2020).

• The deadline for payment of the monthly advance corporate tax due for January, February, March and April 2020, as well as of the advance tax due for the first quarter of 2020 – remains 15 April 2020. 

• The declaring of taxable income by individuals for 2019 by means of tax return under Art. 50 IITA shall be made until 30 April 2020 (with the exception of individuals acting as traders within the meaning of the Commercial Act, including sole traders and registered farmers who shall submit tax returns until 30 June 2020).

• By 30 April 2020 employers are obliged to provide electronically information to NRA regarding employment income, accrued and/or paid to the benefit of individuals – tax residents of other EU Member State (Art. 73a IITA).

2) Interest due for delayed payment of public liabilities

The consequences for non-observance of the deadlines as per Art. 6 AMASE and whether NRA will accrue interest for delayed payment of taxes, social security contributions and other public liabilities are not expressly commented in the Ruling. Art. 6 AMASE provides for that “… until the state of emergency is revoked the consequences for delayed payment of liabilities by private persons shall not be applied, including interest and delay penalties”. The emphasis is on the liabilities of the private persons (whereas the liabilities to the state budget are not excluded). Because of this fact, in our opinion, if the liabilities are not paid on time, interest for the period of delay shall not be accrued until the state of emergency is revoked. As far as AMASE is a special act towards TSSA and it regulates specific relations for a limited period of time, the provision of Art. 6 AMSE shall be applied with a priority to the provisions of TSSE and other tax acts regarding the consequences of delayed fulfillment of obligations.

On the other side, in the cited text from § 49 AMASE it is mentioned that the deadlines for declaring and payment of tax liabilities and liabilities for customs duties do not change, except in the cases of § 25 – 31 of the Transitional and Conclusive Provisions of AMASE. Based on § 49 AMASE, a conclusion can be made that in case of delayed payment of liabilities to the state budget the consequences for non-fulfillment shall apply, namely interest for the period of delay shall be assessed. In the Ruling the revenue authorities did not comment the issue whether interest shall be assessed in case of delayed payment of public liabilities, which could lead to contradictory interpretation and application of AMASE and TSSA. As mentioned above, our understanding is that based on Art. 6 AMASE interest shall not be due, as § 49 AMASE regulates the deadlines for settlement of tax liabilities and liabilities for customs duties but does not regulate the consequences of non-fulfillment as the interest for delayed payment is. These consequences are expressly regulated by Art. 6 AMASE. Irrespective of this fact, in cases of non-observance of the deadlines for payment of liabilities the revenue authorities most probably will continue to assess interest for delay.

A draft Law for Amendment and Supplementation of AMASE has been put into Parliament by means of which Art. 6 of AMASE is amended and its application is limited.

3) Tax audit proceedings 

• The deadlines related to performance of tax audits are also commented in the Ruling, including the fulfillment of the obligations of the parties under these proceedings. These deadlines are not changed by AMASE. Until the state of emergency is revoked, there is no opportunity for opening of executive proceedings under TSSPC, except in extraordinary cases.

• Some instructions are given when determining the deadlines for presentation of evidence or fulfillment of other obligations for cooperation, reviewing claims for extension of deadlines, etc., to take into account the state of emergency. In cases of difficulties for performance of procedure actions, it is recommended the parties in the respective proceedings to avail of the opportunities provided in TSSA for defence of rights and interests, namely to submit a claim for extension of the deadlines determined by the revenue authorities or a claim for cancellation of tax audit proceedings. 

• The deadlines for administrative appeals (including for removing discrepancies in already submitted appeals) shall be suspended until the state of emergency is revoked. 

• When an order for assessment of enforceable administrative measures is issued and the deadline for its appealing has not expired, the order cannot enter into force, respectively cannot be implemented, because of the suspension of the legal term for its appealing during the state of emergency.

• In respect of the deadline for establishing tax liabilities, we would like to draw attention to the following:

The tax audit proceedings conclude with the issuance of tax report, which may be objected to within 14 days from its handing over. This deadline may be extended upon request of the audited person by one month. A tax assessment act shall be issued based on the tax report within 14 days from the submission of the objection or from the expiration of the deadline for it. As far as the deadline for submission of objection is related to the execution of rights by the tax liable person, this deadline shall be suspended until the state of emergency is revoked (Art. 3, para 2 AMASE). Therefore, irrespective of the fact that in § 49 of the Transitional and Conclusive Provisions of AMASE is stipulated that the deadlines for establishing tax liabilities do not change, our opinion is that the deadline for closing tax audit proceedings in practice is extended.

4) Other proceedings under TSSA and the Administrative Offences and Penalties Act (AOPA)

It is expressly mentioned in the Ruling that the suspension of the procedure deadlines (provided by Art. 3, para 1 AMASE) is not applicable to the following proceedings: 

• Set-off and refund of taxes, mandatory social security contributions and other amounts paid, which are subject to refund under the tax and social security legislation;

• Issuance of decisions by the competent bodies on appeals against assessments issued by the revenue authorities or by public enforcement agents;

• Issuance of certificates under Art. 87 TSSE (i.e. certificates for existence or lack of liabilities to the budget);

• According to NRA, the deadlines and proceedings under AOPA are not included in AMASE, as a result of which the deadlines and performance of proceedings for establishing administrative offences, imposition of penalties, and appealing of acts for establishment of offences are not changed. 

This material is not exhaustive, it is only of general nature and does not represent a specific advice or consultation. Should any additional questions arise, please do not hesitate to contact us at tel.: 02/943 37 00, fax: 02/943 37 07, е-mail: office@afa.bg or at: 38, Oborishte Str., Sofia 1504.