Economists’ predictions that with the introduction of a lower VAT for restaurants, many other sectors would demand similar reductions have come true. 20 branch organizations from the agricultural and processing sector have announced an urgent meeting with Bulgarian Prime Minister Boyko Borissov to ask him for a lower VAT rate. They say that the tax on Bulgarian fruits and vegetables should be reduced to 5%. In a letter, they point out that the industry has been constantly raising the issue since 2000.
According to them, the 20% tax rate makes domestic products uncompetitive compared to those imported from the EU and third countries, which are often VAT-free when they enter the country. Domestic producers believe that this has led to the practical destruction of the sector and mass emigration of people from rural areas. They also claim that reducing the rate on fruits and vegetables will not lead to a reduction in budget revenues, but will only eliminate negative practices like the non-payment of the VAT and the pressure from unfair competition on legal producers, the organizations claim.
For its part, the Bulgarian Chamber of Commerce and Industry (BCCI) said that indirect taxes, mostly revenues from VAT and excise duties, account for the biggest share of Bulgaria’s state budget, so even a small reduction in the VAT rate will lead to budget losses, the financing of which will have to be covered by taxpayers. The organization says that many EU countries have different VAT rates, but unlike Bulgaria, direct taxes are high in these countries. As an example, they point to France, where the income tax is 51.5%; in Germany, 47.5%, and in Bulgaria, 10%.