Tax on Profits Act - Bulgaria

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REPUBLIC OF BULGARIA NATIONAL ASSEMBLY TAX ON PROFITS ACT Promulgated State Gazette No. 59/12.07.1996 Chapter One GENERAL PROVISIONS Section I Object of Taxation and Tax Subjects Article 1 (1) This Act shall establish the tax on profits for the republican budget and the
tax on profits for the municipalities, hereinafter referred to as the "tax on
profits" and the "tax for the municipalities". (2) The income of legal persons shall also be taxed pursuant to this Act. Article 2 (1) Tax liable pursuant to this Act shall be: 1. resident and non-resident legal persons; 2. non-profit organisations, as well as other legal persons, including
those supported by the budget, which carry on economic activities; (2) Non-resident partnerships which are not legal persons, as well as branches
of non-resident persons shall also be tax liable pursuant to this Act. Article 3 (1) Resident legal persons shall be taxed for their profits from all sources in
the country and abroad with a tax on profits and a tax for municipalities. (2) Non-resident tax liable persons shall be taxed with a tax on profits and a
tax for municipalities for economic activities and for a permanent
establishment in the Republic of Bulgaria. (3) The tax liable persons are subject to taxation for their income pursuant to
this Act. Article 4 Non-profit organisations and all other legal persons, including those supported by the
budget, shall be taxed for their profits and income obtained as a result of transactions
which would be carried on by occupation in accordance with Article 1 of the
Commerce Act, including from leasing personal and real property. Section II Profits and Income from Sources in the Country Article 5 Profits and income acquired by tax liable persons and jointly with other persons shall
be from sources in the country when they originate from: situated or carried on
activities, invested capital, provided goods, services and rights in the territory of the
Republic of Bulgaria, including within the boundaries of its exclusive economic zone
and continental shelf. Article 6 When the activities are carried on partially in the territory of the Republic of Bulgaria
or within the boundaries of its exclusive economic zone and continental shelf and it is
not possible on the basis of the documents of the tax liable persons that are required
under the Accountancy Act and other normative acts to determine directly the
proportion of the profits originating from sources in the country, the part of the profit
corresponding to the percentage of the activities carried on in the country shall be
deemed such. Section III Tax Base Article 7 The base for determining the tax for municipalities shall be the taxable profit as
established pursuant to chapter two of this Act. Article 8 The base for determining the tax on profits shall be the taxable profit as established
pursuant to chapter two of this Act after deduction of the tax for municipalities. Article 9 (1) The base for taxation of income of resident and non-resident persons and
branches of non-resident persons in the country shall be income from: 1. dividends; 2. participation. (2) The base for taxation of income of tax liable under this Act non-resident
persons, excluding the income mentioned in paragraph 1 shall also be income
from: 1. interest; 2. sale of movable valuables and financial long-term assets; 3. royalties; 4. compensation for technical services; 5. lease from the sources in the Republic of Bulgaria. Section IV Preventing Avoidance of Taxation Article 10 When related persons effect transactions under terms which affect the amount of the
profit and income and differ from the terms between non-related persons, their profit
and income shall be established and taxed under the terms which would arise between
non-related persons. Article 11 When one or more transactions are effected with the purpose of avoiding taxation, the
due tax shall be established in the amounts which would arise under the usual type of
transactions concluded under price terms of exchanges, fixed or observed prices,
statistical price information or an expert valuation. Article 12 (1) In the cases of Article 11, when as a consequence of these transactions the
result from the reported period of the tax liable person has been reduced or a
loss has been reported, when determining the due tax the financial result shall
be increased before tax transformation with the sums ensuing from these
transactions. (2) The financial result before tax transformation shall also be increased when
it was reduced or a loss was reported as a result of effecting transactions
between related persons which differ from the terms applied between non-
related persons. The increase shall be with the sums ensuing from these
transactions. (3) The provisions of paragraphs 1 and 2 shall also apply to related non-
resident persons carrying on independent economic activities, including from a
permanent establishment, to non-resident partners and shareholders participating in resident companies, and to non-resident persons receiving
income in the territory of the Republic of Bulgaria. (4) In case of transactions between resident persons, the persons mentioned in
paragraph 3 and related to them non-resident persons, included in the terms
which differ from transactions between non-related persons shall also be the
application of transfer prices and economic relationships in cases when the
following are present: 1. increase or reduction of prices in effecting mutual transactions for
providing goods or services which differ from the market prices by
more than 25 per cent; 2. payment of remuneration or compensation for services which have
not actually been provided or provision of services without the
respective consideration; 3. receiving or providing credits with an interest differing by more or
less than one quarter of the interest rate determined by operation of
law, as well as remitting credits or repayment of credits that are not
related to the activities, at ones own expense; 4. compensating for expenses for studies, research and development
conducted by a related person and not corresponding in amount or
distributed not in accordance with the results or the volume of activity,
as well as not corresponding in value to the expenditures for non-
related persons; 5. determining the expenditure related to management contracts, to
remuneration for employment or for compensation provided to partners
or to third parties, where there exists no commensurate provision of
labour or services; 6. determining the expenses for control, co-ordination, advertisement
and other administrative activities between related persons which does
not correspond to the terms between non-related persons 7. determining the expenditures for preparation, carriage, packaging,
sale, etc. between related persons which do not correspond to the terms
between non-related persons. Section V Priority Application of Treaties Article 13 (1) When an agreement on avoidance of double taxation or other treaty that
has entered into force, is ratified by the Republic of Bulgaria and published in the State Gazette contains provisions differing from the provisions of this Act,
the provisions of the respective agreement or treaty shall apply. (2) The procedure and manner of documenting and the procedures for
applying the agreements on avoidance of double taxation shall be regulated by
the rules to implement this Act. Chapter Two TAXABLE PROFIT Section I General Rules on Determining the Taxable Profit Article 14 (1) Taxable profit is the positive quantity determined on the basis of the
financial result before tax transformation established in accordance with
Article 40, paragraph 1, item 2 of the Accountancy Act and transformed
pursuant to this Act. (2) The taxable profit of banks, insurance companies, mutual insurance co-
operatives and investment companies is the positive quantity determined on
the basis of the financial result before tax transformation, established in
accordance with Article 41 of the Accountancy Act and transformed pursuant
to this Act. Article 15 (1) In establishing the taxable profit, depreciation expenditures shall be
determined for tax purposes which shall be juxtaposed to the accounting
depreciation quota. The amount of the depreciation shall be determined by
applying systematically the linear method. (2) The depreciation norms for tax purposes in taxing the profit may not
exceed the following amounts: roup of Assets Annual depreciation norm, % 1. Commercial and administrative buildings 3 2. Single-story subject to assembly/disassembly pavilion type buildings (shacks) with mixed construction 10 3. Industrial buildings 15 4. Equipment, transmission devices, power carriers, communication lines 4 5. Water-mains for potable and industrial water - pipe; 5 sewers - pipe 6. Machines, equipment, apparatuses and computers 20 7. Business inventory, including office furnishing 25 8. Transportation equipment, including automobiles 8 20 9. Non-tangible fixed assets 20 (3) For assets not mentioned in paragraph 2, the depreciation expenditures
shall be determined pursuant to Article 20 of the Accountancy Act. Article 16 (1) The amount of the taxable profit shall be obtained by transforming the
amount of the financial result before tax transformation, regardless of whether
it is a positive or negative quantity, through its increase or decrease for tax
purposes. (2) The financial result before taxation shall be increased with: 1. the part of the sum for consumables for representative purposes, for
parties and presents, above 20,000 Leva which exceed 0.2 per cent of
the amount of the realised income established under section I, item 1 of
the report on income and expenditure in accordance with Article 40,
paragraph 1, item 2 of the Accountancy Act; and for banks, for the
persons mentioned in Article 1, paragraph 4 of the Banks and Crediting
Activities Act, for insurance companies, mutual insurance co-
operatives and investment companies, 0.1 per cent of group one of the
report on income and expenditure in accordance with Article 41 of the
Accountancy Act; 2. the sums for business travel exceeding the amounts determined with
normative acts; 3. imposed fines, confiscations and other sanctions for violating
normative acts, as well interest pursuant to the Interest on Taxes,
Charges and other such State Claims Act; 4. the portion of the sum of expenditures for social purposes for the
staff exceeding 10 per cent of the sum total of the accrued staff
salaries, excluding social security payments. In determining the sum
total of the expenditures for social purposes the amount of the income
received from these activities shall be deducted; 5. the positive difference between the accounting depreciation quota,
determined in accordance with Article 20 of the Accountancy Act, and
the tax recognised amount of the depreciation; 6. the expenses not related to the activities such as: expenses for
maintenance and operation of motor vehicles, buildings and other real
and personal property, including leased property which is used
partially or fully for personal use, for recreation, for non-business
travel and for vacation of the partners, shareholders, staff, managers,
comptrollers, directors and third parties; 7. payments (premiums) for life insurance and other personal insurance
which are not established as mandatory by normative acts; 8. the expenditures for improvement, modernisation and reconstruction
of long-term assets which exceed 5 per cent of their balance-sheet
value and lead to an increase in their value through lengthening their
expected useful life, increasing their productivity or considerable
improving the quality of production or reducing the previous expected
production expenditures, in cases where these assets have been
reported as current expenditures (expenditures for repairs), including
the expenditures for leased assets which are not on account of the due
rent; 9. the written off shortages of tangible assets and rejects of tangible
stock and other valuables (excluding those on account of the staff),
with the exception of: those arising from technological rejects, a
change in the physical and chemical properties within normal limits
corresponding to the established norms for maximum amounts of
natural loss and shortages of goods during their storage and carriage, in
accordance with Bulgarian state standards, sectoral and plant norms in
the respective sectors and activities, and other normative acts which
regulate the issues of normal shelf life of goods, as well as of the
destroyed or partially destroyed from natural calamities. The value of
the written off shortages and rejects shall be reduced with the received
compensation from insurance to the amount of the balance-sheet value
of the assets. Where there is a differences between the writing off of
insured assets and the payment of insurance the increase shall be done
simultaneously with the receipt of the insurance compensation; 10. the expenditures which represent a hidden distribution of profit in
favour of shareholders, partners or third parties; 11. the expenditures for interest on credits from partners and
shareholders which have not made the respective payments on
subscribed interests or shares; 12. the untaxed profit, determined in accordance with Article 37 of this
Act; 13. the expenditures which the tax liable persons may not prove with
documents under the procedure required by the respective normative
acts; 14. the income not reported in accordance with the procedure
established by normative acts; 15. the expenditures reported as a result of events of previous reporting
periods which lead to a decrease in the financial result during the
present reporting period, under a procedure to be established with the
rules to implement this Act; 16. the expenditures arising from transactions between related persons
and third parties in accordance with section IV of chapter one of this
Act; 17. provided and reported as expenditures funds for political parties,
trade unions and other public organisations; 18. the temporary differences arising from the application of Articles
22, 24, 25 and 31 of the Accountancy Act. This item shall not apply to
banks and the State Savings Bank; 19. the portion of interest exceeding the amount determined pursuant
to Article 21; 20. the temporary differences arising from the recognising of income
from export transactions applying Article 17; 21. the profit from activities carried on through unregistered
partnerships pursuant to Article 357 of the Obligation and Contract Act
and through consortia pursuant to Article 275 of the Commerce Act. (3) The financial result before tax transformation shall be reduced with 1. the tax preferences pursuant to § 28, paragraph 5 of the Transitional
and Final Provisions of the Ownership and Use of Farmland Act
(published State Gazette No. 45 of 1995; corrigendum State Gazette
No. 46 of 1995) during the three consecutive years from the date of its
entry into force. The preferences shall apply to claims which have not
been reported as expenditures in determining the financial result before
tax transformation; 2. donations in favour of: institutions and organisations of learning;
scientific, cultural, educational, social, sports and tourist organisations;
foundations with charitable, nature protection, health, scientific
research and cultural and educational aims; funds for supporting
invalids and victims of natural calamities; the Bulgarian Red Cross;
Social Assistance Fund; Social Assistance of Military Servicemen;
Rehabilitation and Social Integration Fund; as well as for national
security and defence; potable water; aiding the socially
underprivileged, invalids, children with impaired health or without
parents; scholarships and aid to students; scientific research;
restoration and conservation of natural, historic and cultural monuments; for the state and municipalities, with the exception of the
donations to the state and municipalities made by persons with state or
municipal participation, to the amount of 3 per cent of the positive
financial result before tax transformation; 3. sums from dividends and from participation received as a result of
the distribution of profits of resident persons, branches of non-resident
persons, when the distributed profit has already been taxed pursuant to
Article 30; 4. the temporary differences arising from the exceeding of the tax
recognised depreciation over the accounting quota as established by
the rules to implement this Act; 5. the temporary differences appearing in the realisation of assets or in
settling obligations bearing these differences, arising from Articles 22,
24, 25 and 31 of the Accountancy Act; 6. the portion of the losses transferred from previous years pursuant to
chapter 5; 7. the income reported as a result of events of previous reporting
periods which lead to an increase in the financial result during the
present reporting period, under a procedure to be established with the
rules to implement this Act; 8. temporary differences arising from receiving the income from export
transactions when applying Article 17; 9. temporary differences arising from recognition of accrued interest
when applying Article 21; 10. production and consumer dividends paid by co-operatives to its
members pursuant to chapter 2, section IV. (4) The reductions provided for in paragraph 3, item 2 shall be enjoyed
provided that the legal persons do not have, as of the moment of making the
donation, unpaid obligations, including advance payments, for taxes, charges,
duties, excise tax, social security payments and Professional Training and
Unemployment fund payments and the donations do not benefit the persons
making or disposing them. (5) When a donation is in kind its amount shall be determined in accordance
with the market price or the price shown in the notarial deed when making the
donation, if it is higher; (6) Tax preferences for donations shall be recognised on the basis of a contract
and document showing that the donation has been received. (7) A donation as provided in paragraph 3, item 2 shall be deemed made as
follows: 1. for cash donations - as of the date on which the donated funds have
been paid; 2. for personal property, real property and real rights on real property -
as of the date of conclusion of the transaction; 3. for participation - as of the date of the court decision for registration
in the register; 4. for securities - as of the date of the transfer of ownership. (8) For tax purposes, recognised as expenditures shall be the actually charged
interest for received loans and obligations, with the exception of interest
payments which do not exceed the maximum amount determined pursuant to
Article 21. (9) For tax purposes, the income from interest on credits provided by banks,
the State Savings Bank and the income from interest on credits provided by
holding companies pursuant to Article 280 of the Commerce Act shall be
recognised upon being charged. Article 17 For export transactions the income for tax purposes shall be recognised within the
framework of the tax period in case of invoicing goods or performing services, with
the exception of the pledging of goods, except where the title to the pledged goods has
passed to the creditor. Article 18 (1) The financial result before tax transformation may not be reduced with the
created reserves. (2) The financial result before tax transformation of the banks shall be reduced
with the funds of the Guarantee Fund of the commercial banks, up to 20 per
cent of the positive financial result before tax transformation, established as a
difference between the sum total of income and expenditure pursuant to a
procedure to be determined by a law. Article 19 The special reserves and funds of licensed insurance companies and mutual insurance
co-operatives shall be deducted from the profit before taxation under a procedure to
be determined by a law. Article 20 (1) The sum total of all provided tax preferences, including losses transferred
pursuant to chapter five, may not exceed the positive financial result before
tax transformation as per the respective reports on income and expenditures,
reduced with the amount of the payments to municipalities. (2) The received dividends, which are taxed pursuant to Article 30, shall be
deducted in full in case of tax transformation regardless of the provision of
paragraph 1. Section II Regulation of Weak Capitalisation Article 21 (1) The maximum amount of the recognised for taxation interest payments
arising from contributions made pursuant to Articles 134 and 190 of the
Commerce Act, additional contributions and other such in accordance with the
Articles of Association or a decision of the general meeting, and from
company credit for each tax period in determining the taxable profit may not
exceed 10 percent of the expenditures under sections I, II and III of the report
on income and expenditures, reduced with the amount of such interest. (2) The financial result shall be increased with 25 percent of the excess of the
interest payments under paragraph 1, unless conditions exist for applying the
provisions of chapter one, section IV, in which case the financial result shall
be increased with the full amount of the excess. (3) The expenditures on interest with which the taxable profit is increased
during the current year shall be subject to deduction from the taxable profit
during the following tax year up to the amount of the allowable correlation
provided for in the previous paragraphs. (4) Paragraphs 1-3 shall not apply to banks, the State Savings Bank and the
holding companies, observing the provisions of Article 280 of the Commerce
Act. Section III Tax regulation of Lease Agreements Article 22 In case of an operational lease agreement of a long-term asset the lessor shall report in
its income the lease payments received, and in its expenditures the charged
depreciation on the leased asset, where the lease is not a financial lease. Article 23 (1) A financial lease agreement shall be a lease agreement which is concluded
for a term, including the terms for which the initial agreement is renewed,
longer than one year and in which any of the following circumstances are
present: 1. the term of the agreement, including the terms for which the initial
agreement is renewed, exceeds the economic useful life of the leased
asset; 2. the agreement contains a clause for purchase and transfer of title of
the leased asset upon expiration or after the expiration of its term; 3. the lessee has made or guaranteed a loan to the lessor and in this
way has given him the opportunity to acquire the leased asset; 4. assets provided under the lease agreement, because of their specific
nature, may be used only by the lessee under certain circumstances -
place, duration, etc. (2) A financial lease agreement shall be deemed a sale of the long-term asset
leased by the lessor, and the lessee under such an agreement shall be deemed a
buyer and owner of the leased asset. (3) In the cases where under the guise of an operational lease agreement the
transfer to the lessee of the title of the leased asset is concealed, the lease
agreement shall be deemed financial. Section IV Specific Rules for Determining the Taxable Profits Article 24 (1) The production and consumer dividends paid to the members of the co-
operative until March 15 of the following year shall be deducted from the co-
operative's taxable profit. (2) The production dividends shall be distributed for the produced by the
members of the co-operative and sold to the co-operative products. They shall
be determined on the basis of the profit corresponding to the sold, including
after their processing, goods. (3) The consumer dividends shall be distributed for consumer goods purchased
by the members of the co-operative from the co-operative. They shall be
determined on the basis of the profit arising from the difference between the
sale price at which the co-operative has sold the goods and the price which
was paid by the co-operative for their acquisition. (4) When the co-operative also carries on other economic activities, the profit
from them may not be distributed among the members of the co-operative
under the form of deduction of production and consumer dividends. (5) The received by the members of the co-operative production dividends
shall be taxed as income of natural persons. Section V Taxable Profits of a Branch of a Non-Resident Person Article 25 The taxable income of a branch of a non-resident person, including of a branch of a
bank, determined pursuant to this chapter, shall be increased with the amount of the
profit attributable to the branch and acquired both in the country and abroad, which is
not reflected in the accounting documents but arises from its activities and which it
would realise had it been an independent person exercising the same or similar
activity under the same or similar conditions. Section VI Taxable Profits of Association and other Non-Profit Organisations from their Economic Activities Article 26 (1) The taxable profit of tax liable persons as provided in Article 4 of this Act
shall be determined on the basis of the positive financial result before taxation
and transformed pursuant to paragraph 2. (2) The positive financial result shall be transformed by: 1. reduction with the financial income from interest, the positive
financial result obtained from the sale of movable valuables and the
dividends and sums from participation obtained as a result of the
distribution of the profit of resident persons, when the distributed profit
has already been taxed in accordance with Article 30; 2. increase with the expenses to the benefit of the participants in
management (excluding expenses for personal labour), or third parties
or for transactions which circumvent the law. Article 27 The non-profit associations, as well as other legal persons including those supported
by the budget, shall include in their taxable profit the value of the assets which has
been transferred without consideration to third parties, where such transfer is not
related to the non-profit aims of the association. Chapter Three TAX REGULATION OF LICENSED INVESTMENT COMPANIES AND PRIVATISATION FUNDS Article 28 The licensed investment companies and privatisation funds shall not be taxed with a
tax on profits for the portion of their profits originating from owning or trading in
securities and from interest from bank deposits, if such profit is subject to distribution
as a dividend among their shareholders. Article 29 The shareholder's dividends shall be taxed in accordance with Article 30. Chapter Four TAXATION OF DIVIDENDS, INCOME FROM PARTICIPATION, FROM THE SALE OF MOVABLE VALUABLES AND FINANCIAL LONG-TERM ASSETS, FROM INTEREST, ROYALTIES AND OTHER INCOME Section I Tax on Dividends and Income from Participation Withheld at the Source Article 30 Dividends and income from participation paid by resident legal persons and branches
of non-resident persons shall be taxed with a tax which shall be withheld at the source
and shall be final. Section II Avoidance of Double Taxation of Holding Companies with Tax on Dividends Article 31 (1) A subsidiary shall not withhold tax pursuant to Article 30 on dividends
which it has charged in favour of the holding company established pursuant to
Article 277 of the Commerce Act, provided that all subsidiaries and the
holding company are resident persons. (2) The regime of taxing the dividends mentioned in paragraph 1 shall not
apply to companies which have joined or left the holding company in the
course of the tax year. (3) If the holding company is transformed pursuant to chapter XVI of the
Commerce Act into another company which meets the requirements of
paragraph 1, the new company or the company into which the holding
company has been transformed shall assume the status of the holding company
after informing the tax authorities. Section III Income Tax of Non-Resident Persons Article 32 When the tax liable persons mentioned in Article 2 pay to non-resident persons
interest, lease, royalties, and compensation for technical services, as well as income
from the sale of movable valuables and financial long-term assets and other income
arising from a source in Bulgaria, including from activities of partnerships pursuant to
Article 357 of the Obligations and Contracts Act, they shall deduct at the source tax in
the amounts provided for in Article 44. The tax shall be final. Chapter Five CARRYING OVER LOSSES TO FOLLOWING TAX PERIODS Section I Carrying Over Losses from Sources in the Country Article 33 (1) The negative annual financial result before tax transformation (loss) of tax
liable persons, corrected with the sums provided for in Article 16, paragraph 2,
with the exception of the sums provided for in Article 16, paragraph 2, items
5, 12, 15, 18, 20 and 21 shall be deducted consecutively during the following
five calendar years. (2) The losses shall be deducted when determining the taxable profit up to the
amount of the positive financial result during the following tax year, and if it
is insufficient, the difference from the losses shall be deducted during the
following years within the framework of the five-year period from their
arising. (3) For losses arising in the course of the five-year period the provisions of
paragraphs 1 and 2 shall apply, observing the consecutiveness of the arising of
the losses. For each of the newly arising losses the term begins to run from the
moment of their arising. Article 34 The right to carry over losses pursuant to Article 33, paragraph 1 may not be
transferred in cases of dissolution or transformation or other transactions, as a result of which the ownership of the tax liable person incurring losses has changed by more
than 50 percent. Article 35 For tax liable persons with more than 50 per cent state or municipal participation the
losses shall be deducted pursuant to Article 35 with the permission of the minister of
finance. Section II Carrying Over Losses from Sources from Abroad Article 36 Losses determined pursuant to Article 33 with a source from outside Bulgaria shall be
deducted consecutively only from the profits from the same source outside the
country during the following five years. Chapter Six TAXATION IN CASES OF WINDING UP AND TRANSFORMATION OF RESIDENT AND NON-RESIDENT PERSONS AND OF BRANCHES OF NON-RESIDENT PERSONS Section I Tax Regulation in Cases of Winding Up Article 37 (1) In the cases of winding up resident legal persons and branches of non-
resident persons the due tax on profits, respectively the due tax for the
municipalities, shall be established as of the date of adopting the decision for
winding up. (2) Paragraph 1 shall also apply in cases of winding up of resident legal
persons, branches of non-resident persons with the expiration of the term for
which they are established, as well as with the achieving of the aim with
which they are established. (3) The due tax on profits and the due payments from profit to the
municipalities of wound up legal persons and branches of non-resident persons
shall be determined on the basis of the taxable profit established pursuant to
this Act for the period from the beginning of the year until the date of adoption
of the decision to wind up. (4) In addition to the tax liabilities pursuant to paragraph 3 the legal persons
and branches of non-resident persons, for which a decision to wind up has been adopted, shall pay a tax on profits and a tax for the municipalities,
determined as of the date of adoption of the decision and on: 1. the profit which has not been taxed as a result of creating untaxed
reserves (provisions) which have not been reintegrated with the profit; 2. the profit which was not taxed as a result of enjoying tax
preferences, with the exception of these pursuant to Article 16,
paragraph 3, item 2 of this Act; 3. the positive difference between the value of the company's assets at
market prices as of the moment of winding up and their balance-sheet
value, reduced with the enterprise's liabilities. 4. The provisions of item 3 shall not apply to the persons who are
wound up due to bankruptcy. (5) After the establishment of the due tax on profits and tax for the
municipalities as of the date of adoption of the decision to wind up a resident
legal persons and a branch of a non-resident person, the income from
dividends and participation, which shall be taxed in accordance with chapter
four, shall be determined. (6) The tax on profits and the tax for the municipalities in case of winding up
shall be determined irrespective of the obligation for preparing the annual
accounting report. (7) The amount of the tax on profits and the tax for the municipalities as of the
date of adoption of the decision to wind up shall be indicated in the tax return
form approved by the minister of finance and is subject to payment to the
budget as an extraordinary advance payment. (8) The difference between the due tax on profits and the tax for the
municipalities pursuant to paragraph 3 and to paragraph 4, items 1, 2 and 3
and the advance payments made shall be paid within 30 days from the date of
adoption of the decision to wind up. (9) Following the date of adoption of the decision to wind up the due tax on
profits and the tax for the municipalities shall be determined pursuant to the
general procedure for determining advance payments and the annual tax.
Following this date the enjoyment of tax preferences shall cease. (10) The due tax on profits and tax for the municipalities as of the date of
adoption of the decision to wind up resident legal persons and branches of
non-resident persons shall be established regardless of whether their relations
with third parties or their partners or shareholders have been settled. Article 38 (1) Also included in the tax obligations of resident legal persons and branches
of non-resident persons are the established by the tax authorities with a
taxation act unpaid as of the date of adoption of the decision to wind up taxes
and payments for previous periods. (2) In cases when the tax obligations are established with taxation acts from
following tax inspections and audits, the tax obligations are claimable,
including from the successors. Article 39 Resident legal persons and branches of non-resident persons must, within 14 days of
adoption of the decision to wind up, inform the respective tax office in writing of the
decision. Article 40 In case of winding up unregistered partnerships established pursuant to Article 357 of
the Obligation and Contract Act and consortia under Article 275 of the Commerce
Act, legal persons who are partners in them shall apply Articles 37, 38 and 39. Section II Tax Regulation in Case of Transformation Article 41 (1) Legal persons for which a decision to transform in accordance with
chapters IX and XVI of the Commerce Act has been adopted shall be taxed
with a tax on profits and tax for the municipalities pursuant to Article 37,
paragraphs 3, 6, 7 and 10 and Article 38; compensation of their losses with
profits of the successor is not permitted. (2) The difference between the due under Article 37, paragraph 3 tax on
profits and tax for the municipalities and the paid advance payments shall be
paid within 30 days from the date of adoption of the decision to transform. (3) After the date of adoption of the decision to transform the due tax on
profits and payments from profit to the municipalities shall be established
pursuant to the general procedure for determining advance payments and the
annual tax. (4) The persons mentioned in paragraph 1 must inform the respective tax
office of the date of adoption of the decision to transform within 14 days (5) The persons whose state or municipal participation following privatisation
drops to below 50 per cent shall file a tax return within 30 days of the
registration of the change in the commercial register. The tax return shall be
filed as per the established form for an annual tax return and prior to the
expiration of the 30-day period the difference between the declared tax from the beginning of the year and the advance payments, the dividends for the
state, the unpaid taxes on income from dividends pursuant to chapter four and
the tax for the municipalities. A tax return for advance payments and an
annual tax return shall be filed pursuant to the general procedure for the results
from the economic activity for the period from the date of registration of the
change in the commercial register to the end of the year. (6) The provisions of paragraphs 1, 2 and 3 shall not apply when as a result of
transformation the tax status of the successor is not changed and no sale or
other disposal of the assets is made. Chapter Seven TAX RATES Article 42 (1) The tax on profits of the tax liable persons shall be 36 percent. (2) The tax on profits of the tax liable persons shall be 26 percent when their
taxable profit is up to 2,000,000 Leva. Article 43 The tax for the municipalities of tax liable persons shall be 6.5 percent. Article 44 The dividends and income from participation under Article 30, interest, lease
payments, royalties, compensation for technical services, income form the sale of
movable valuables and financial long-term assets and other income under Article 32
with a source in the Republic of Bulgaria shall be taxed at 15 percent of their gross
amount. Chapter Eight PAYMENT OF THE TAX ON PROFITS AND THE TAX FOR THE MUNICIPALITIES Section I Tax Payers Article 45 The tax liable persons as per this Act shall be payers of the tax on profits and the tax
for the municipalities. Article 46 (1) The tax on dividends, income from participation, income from the sale of
movable valuables and financial long-term assets, interest, lease, royalties,
fees for technical services and other income with a source in the Republic of
Bulgaria shall be deducted and paid by the tax liable persons who are charging
such income. (2) When the tax under the previous paragraph has not been charged, deducted
and paid in the prescribed manner, it shall be owed by the tax liable as per this
Act persons who had the obligation to charge and pay it. Section II Tax Return Article 47 (1) The due annual tax on profits and tax for the municipalities shall be
established pursuant to this Act and shall be shown in a tax return according to
a form approved by the minister of finance. (2) The tax return shall be filed by the tax liable persons with the respective
tax office by 31 March of the following year. The annual accounting report
shall be filed together with the tax return. (3) In case of winding up without liquidation and in case of transformation, the
tax liable persons mentioned in Article 2 shall file a tax return according to a
form approved by the minister of finance for the due tax on profits and tax for
the municipalities within 30 days from the moment of winding up or
transformation. (4) In case of winding up of a tax liable person with liquidation the liquidators
must file a tax return within 14 days before undertaking acts to satisfy the
creditors pursuant to Article 268, paragraph 1, of the Commerce Act. (5) The certificate issued according to a form approved by the minister of
finance with which the payer of income certifies the deduction at the source of
the due tax shall also be deemed a tax return. (6) The certificate mentioned in paragraph 5 shall be presented by the tax
liable persons within 14 days of the deduction of the tax, with the tax office
where they are registered. The non-filing of the certificate shall be deemed a
non-filing of a tax return. Section III Payment of the Tax Article 48 (1) The tax liable persons shall pay the tax on profits and income tax to the
Republican Budget, with the exception of the persons with more than 50
percent municipal participation who shall pay the tax on profits and income
tax to the respective municipal budgets. (2) The tax liable persons shall pay the payments from profit to the
municipalities to the respective municipal budgets. Article 49 (1) The tax on profits and the payments from profit to the municipalities for
the respective year shall be paid not later than 31 March of the following
calendar year, after deduction of the sums of the paid advance payments. (2) In cases where the paid advance payments exceed the tax due for the
respective period with accumulation from the beginning of the year, the excess
tax on profits and tax for the municipalities paid shall either be set off or paid
back pursuant to the Tax Procedures Act. Article 50 The payers of income must deduct the due tax and pay it to the budget within five
days of the deduction. Article 51 Following the date of adoption of a decision to wind up or transform the due tax on
profits and tax for the municipalities until the date of entry into force of the decision
for registration in the commercial register shall be paid pursuant to the procedure of
Articles 53 and 54. Section IV Advance Payments of the Tax on Profits and the Tax for Municipalities Article 52 (1) The quarterly advance payments on the tax on profits and the tax for the
municipalities shall be paid to the respective budgets on the basis of the
taxable profit for the period with accumulation from the beginning of the year,
deducting the payments made. (2) The tax liable persons who for the previous year have an annual taxable
profit of more than 2,000,000 Leva shall make advance monthly payments,
and for the first two months of the quarter shall pay one third of the tax due for
the previous quarter. (3) Where monthly accounting of income and expenditure is kept, the tax
liable persons mentioned in paragraph 2 may make advance monthly payments
based on the actual results from the respective accounting period. (4) The newly founded in the course of the year tax liable persons shall make
quarterly advance payments pursuant to paragraph 1 as of the date of their
registration. (5) The tax liable persons who have ended the previous year with a loss shall
make advance quarterly payments pursuant to this Act, and in determining the
advance payments the loss subject to a reduction in accordance with chapter
five of this Act shall be deducted with accumulation from the beginning of the
year. Article 53 (1) The insurance companies and mutual insurance co-operatives shall make
advance payments on the basis of a one twelfth part of the annual taxable
profit for the previous year. (2) The monthly advance payments as per paragraph 1 shall be due for the
period between April 1 of the current year until March 31 of the following
calendar year. (3) The formed and registered in the course of the year insurance companies
shall make advance payments based on the anticipated by them profit until the
end of the calendar year. Article 54 (1) The advance tax on profits and tax for the municipalities payments shall be
made as follows: 1. monthly payments: until the 15th of the following month; 2. quarterly payments: until the 15th of the month following the
quarter. 3. for the fourth quarter, respectively for December: until 25
December, whereby the advance payment for December of the tax
liable persons who make monthly advance payments shall be equal to
the due payment for November, and the quarterly advance payment of
the tax liable persons who make quarterly advance payments shall be
equal to one third of the payments due for the first three quarters. (2) For January and February monthly advance payments shall be made only
by the tax liable persons mentioned in Article 2 who have made monthly
advance payments during the previous year. The amount of the payments for
each of these two months shall be equal to the advance payment for December
of the previous year. (3) For the due advance payments as per the previous paragraphs a tax return
according to a form approved by the minister of finance shall be filled in and filed with the respective tax office within the time periods for making advance
payments. Article 55 The insurance companies and mutual insurance co-operatives shall, using a tax return
according to a form approved by the minister of finance, inform the respective tax
office of the reduction of the advance payments as per Article 53, if they believe that
they exceed or shall exceed the due annual tax. Section V Interest on Late Payments Article 56 (1) For tax not withheld and paid within the prescribed time periods, including
for advance payments, interest shall be owed in accordance with the Interest
on Taxes, Charges and other such State Claims Act. The paid less than due
advance payments as a result of incorrect application of Articles 52, 53 and 54
shall also be deemed unpaid taxes. (2) When the actually due annual tax exceeds by more than 10 per cent the
reduced pursuant to Article 55 advance payments, the interest rate determined
by operation of law as of 31 December of the respective calendar year shall be
collected. Section VI Deduction of the Tax on Profits Article 57 (1) The tax on profits shall be deducted by the legal persons in which the
reassigned persons and invalids are not less than: 1. for blind persons and persons with poor vision: 30 percent of the
total number of the staff employed in the main activities; 2. for all other illnesses: 50 percent of the total number of the staff
employed in the main activities. (2) In the cases mentioned in paragraph 1 the legal persons shall charge but
not pay the tax on profits. (3) The tax on profits of legal persons shall also be deducted when the number
of reassigned persons and invalids is below the norms specified in paragraph
1. The deduction shall be done pro rata to the impaired persons towards the
total number of the staff. (4) The amounts of the deducted tax shall be transferred to the Rehabilitation
and Social Integration Fund established pursuant to the Protection,
Rehabilitation and Social Integration of Invalids Act. (5) The tax on profits from the activities of enterprises included in the system
of the Military Industry Directorate with the Ministry of Defence shall be
deducted in favour of the Ministry of Defence. The Council of Ministers shall
determine the procedure for using the deducted tax. Article 58 (1) Companies in which after privatisation the state or municipal participation
has dropped to 33 per cent or less may deduct the tax on profits as follows: 1. One hundred per cent for the first three years following the date of
entry into force of the court decision for registration in the commercial
register of the changes in the case of a limited liability company and
the date of transfer of the title to the shares in the case of joint-stock
company; 2. Fifty per cent for the fourth and fifth year. (2) The tax on profits shall be deducted provided that the payments agreed
upon under the privatisation transaction are made within the agreed time
periods and all of the following terms are met for the respective years: 1. An annual increase in the volume of the net amount of the sales
revenues; 2. Investing not less than 50 per cent of the deducted amounts in fixed
tangible assets of the same company; 3. Observing the schedule of obligations concerning the investment
programme and employment assumed with the privatisation contract; 4. Performance of the obligations towards the budget and the social
security system. (3) The deduction of the tax of companies shall be terminated in case of
transformation pursuant to chapter XVI of the Commerce Act with the
exception of the cases provided for in Articles 264 and 265 of the said act. Article 59 (1) Co-operatives and enterprises formed by them which are registered prior to
the entry into force of this Act and are members of national co-operative
unions established prior to that date shall deduct the tax on profits for a period
of five years in case the following terms are met: 1. The national co-operative unions shall establish special funds in
which 50 per cent of the deducted amounts shall be deposited; 2. The co-operatives and the enterprises formed by them shall transfer
50 per cent of the deducted tax in the special funds established
pursuant to paragraph 1 within the time periods existing for payments
to the budget; 3. The deducted tax on profits is spent for investment purposes and
subsidies. (2) The national co-operative unions shall report annually to the Council of
Ministers the purposeful spending of the deducted tax on profits. Article 60 (1) The tax on profits shall be deducted pursuant to Article 58, paragraph 1,
items 1 and 2 by companies with foreign participation, in cases not involving
privatisation transactions, if the following are present: 1. the amount of the capital of the established company, including the
increase of the existing capital, may not be less than the Lev equivalent
of 5 million United States Dollars; 2. The foreign participation is not less than 50 per cent; 3. At least 50 per cent of the deducted amounts are invested in fixed
tangible assets. (2) The deduction of the tax of companies shall be terminated in case of
transformation pursuant to chapter XVI of the Commerce Act with the
exception of the cases provided for in Articles 264 and 265 of the said act. Article 61 (1) The tax liable persons shall deduct 2 percent of the due tax on profits and
sums shall be paid to the Melioration Fund. (2) The procedure and manner of making the payments to the Melioration
Fund shall be established with the rules to implement this Act. Chapter Nine PAYMENTS TO THE PROFESSIONAL TRAINING AND UNEMPLOYMENT FUND Article 62 (1) The employers, excluding those supported by the budget, shall make
obligatory payments to the Professional Training and Unemployment Fund to the amount of 5 per cent of the charged staff salaries which shall be included
in their expenditures. (2) The procedure and manner of making the payments and spending the
monies of the Professional Training and Unemployment Fund shall be
established by the Council of Ministers. Chapter Ten ADMINISTRATIVE LIABILITY AND FINANCIAL SANCTIONS Article 63 (1) For violations of Article 27, Article 37, paragraph 8, Article 41, paragraph
2, Article 49, paragraph 1, Article 50 and Article 51 a financial sanction to the
amount of the unpaid tax, but not less than 50,000 Leva, shall be imposed
upon the tax liable persons. (2) For violations of Article 24, paragraph 4, a financial sanction to the
amount of the object of the violation shall be imposed upon the co-operatives. (3) The persons at fault who have allowed a violation of Article 24, paragraph
4, and Article 27 shall be fined from 5,000 Leva to 50,000 Leva. Article 64 (1) For non-filing of a tax return as per Article 37, paragraph 7, Article 47,
paragraphs 2, 3, 4 and 6, Article 54, paragraph 3 and § 2 within the prescribed
in this Act time periods, the persons at fault shall be fined from 5,000 Leva to
30,000 Leva. (2) For a repeat offence as per paragraph 1 the fine shall be from 10,000 Leva
to 50,000 Leva. Article 65 A person who is obligated to under Article 39 and Article 41, paragraph 4, to inform
the respective tax authorities and does not do so shall be fined fro 10,000 Leva to
50,000 Leva. Article 66 (1) For violations of Article 10 and Article 11 the persons at fault shall be
fined from 10,000 Leva to 50,000 Leva. (2) For a repeat offence as per paragraph 1 the fine shall be from 15,000 Leva
to 80,000 Leva. Article 67 Where the persons as per Article 63, paragraph 3, Articles 64, 65 and 66 are legal
persons, the persons representing the legal persons shall be fined. Article 68 (1) Violations shall be established with an act of a tax authority. (2) A penal order shall be issued by the head of the Chief Directorate of the
Tax Administration or by a person authorised by him. (3) The act for establishing a violation and the penal order shall be drawn up,
issued and appealed pursuant to the Administrative Violations and Sanctions
Act. ADDITIONAL PROVISION § 1. For the purposes of this Act: 1. "Related persons" means the persons specified in § 1, paragraph 1 of
the Additional Provisions of the Commerce Act, as well as the persons
between whom relationships are established with respect to taking part
directly or indirectly in management, control or capital of one or the
other person or persons, due to which between them commercial or
economic terms differing from those which would arise between non-
related persons could be imposed or agreed upon. 2. The term "financial result before tax transformation", where it is not
expressly clarified, means the difference between the sum total of
income and of expenditure under sections one, two and three of the
report on income and expenditure (annex to Article 40, paragraph 1,
item 2 of the Accountancy Act) or the difference between the sum total
of income under sections one, two and three, and expenditure under
sections one, two, three and four of the report on income and
expenditure in accordance with Article 41 of the Accountancy Act. 3. The term "income" includes income from: dividends, participation,
interest, the positive difference from the sale of movable valuables and
financial long-term assets, royalties, compensation for technical
services and lease. 4. The term "dividend" means: a) income from shares; b) income from participation and from other corporate rights
treated as income from shares, excluding debt claims; c) carried out distribution by the legal person in favour of a
partner or shareholder arising from their own share in the capital of the same legal person, regardless of whether it has
current or accumulated income and profits; d) the part of the price of purchased by a partner or shareholder
shares exceeding their initial value according to the accounting
documents; e) the part of the liquidation share of each shareholder or
partner exceeding its expenses for acquiring the shares or
interests. 5. "Interest" means income of any kind of debt-claims, regardless of
whether or not secured by a mortgage or with a clause to participate in
the debtor's profits and especially the income from debentures, bonds
and other financial instruments related to these securities. Penalty
charges for late payments shall not be regarded as interest for the
purposes of chapter five. 6. "Royalties" means: payments of any kind received as a
consideration for providing the right to use copyright or neighbouring
rights within the meaning of Articles 3 and 72 of the Copyright and
Neighbouring Rights Act, as well as trademarks and service marks and
industrial designs pursuant to the Trademark and Industrial Designs
Act, and patentable inventions and patentable utility models pursuant
to the Patents Act. 7. "Compensation for technical services" means payments for services
of a consulting nature rendered by non-resident legal persons, except
where the services are provided through a permanent establishment. 8. "Market price" is the sum, minus VAT and excise tax, which would
be paid under the same terms for an identical commodity or service in
a transaction between parties who are not related. 9. "Non-resident person" is defined in accordance with the provision of
Article 2 of the Economic Activity of Foreign Persons and Protection
of Foreign Investments Act. 10. The term "tax credit" means the right under certain conditions to
deduct sums from the due tax on profits and income tax from already
paid taxes or from the tax base. 11. "Permanent establishment" means: a) a fixed place through which a non-resident person carries on
wholly or partly economic activities in the country, which
includes: a place of management, a branch, a bureau, an office,
a studio, a plant, workshop (factory), a shop, a warehouse, a
garage, an installation project, a construction site, a mine, a quarry, a drill, an oil or gas well, source or other place of
extraction of natural resources; b) carrying on of activities in the country by persons who are
authorised to conclude contracts on behalf of non-resident
persons, with the exception of the activities of the independent
agents as defined in chapters II and III of the Commerce Act. 12. Expenditures for social purposes are: expenditures for making less
expensive the food in canteens; the sums paid for food or the food
provided in kind to employees of enterprises which do not have their
own canteens; for payment of a part or the full price of the staff's
vacation vouchers; payment of rent; payment of the staff's public
transport expenses; payment of the price of medicines and medical
services; maintaining a medical checkpoint; maintaining own sports
facilities and rest homes for use by the staff; and the payments for
voluntary pension, health and social insurance at the expense of the
employer, established by law and provided pursuant to a decision of
the general meeting of employees; 13. The "hidden distribution of profit" are various payments in cash or
in kind that have been reported as expenditures which were made by
the tax liable persons in favour of the partners, shareholders, staff,
managers, comptrollers, directors and third parties, without being
related to the carried on economic activities, such as: illegally paid
compensation, rent, debt, interest on loans, salaries, advances, business
travel and other expenses for work and services which for the purposes
of taxation are not recognised as expenses for the activities, as well as
provided entitlements and benefits in cash or in kind in addition to the
established salaries, wages and compensation for personally done
work, expenses for social purposes under item 12. 14. "The winding up of resident legal persons and branches of non-
resident persons" includes: the cases of winding up with liquidation
pursuant to chapter XVII of the Commerce Act; the cases of ceasing
activities without liquidation in case of purchasing of enterprises and
cases of winding up branches of non-resident persons. 15. "Repeated" is an offence committed within one year of the entry
into force of the penal order with which the offender has been
sanctioned for a crime of the same type. 16. "Deduction of the tax" is the right of a tax liable person not to pay
to the budget the computed pursuant to this Act and charged amounts
of tax which remain within the patrimonium of the tax liable person or
are spent for purposes determined by the law. TRANSITIONAL AND CONCLUDING PROVISIONS § 2. (1) The tax liable persons must, within one month of the entry into
force of this Act, file with the respective tax office a statement of the
existence the circumstances mentioned in § 1, paragraph 1, items 3, 4,
5, 8 and 9 of the Additional Provisions of the Commerce Act, on a
form to be approved by the minister of finance, except if they have
declared these circumstances on other grounds. (2) The tax liable persons must, upon request from the tax authorities,
declare the existence of the remaining circumstances under § 1 of the
Additional Provisions of the Commerce Act. (3) Within one month from the change of any of the circumstances
under paragraphs 1 or 2 the tax liable persons mentioned in Article 2
must file a statement for correcting the data on a form to be approved
with the rules to implement this Act. § 3. (1) The tax relief provided to resident legal persons without state
or municipal participation pursuant to Article 87, paragraph 4, item 2
of Decree 56 on Economic Activity may be enjoyed until the end of
1998 in the following cases: 1. for fixed assets which are introduced in operation in stages
related to these assets and reported under the established
procedures, provided that prior to the entry into force of this
Act at least one stage has been finished and reported; 2. for fixed assets acquired or created through the use of a bank
credit, provided that prior to the entry into force of this Act at
least one repayment instalment for the credit has been made; (2) The persons mentioned in paragraph 1 during the period ending at
the end of 1998 shall: 1. not include as expenditures in computing their taxable profit
pursuant to this Act the depreciation for fixed assets for which
tax relief was enjoyed pursuant to Decree 56 on Economic
Activity up to the amount of the relief enjoyed; 2. increase their financial result with the non-depreciated part
of the written off fixed tangible assets for which tax relief was
enjoyed, taking into account the increases made pursuant to
item 1, regardless of the reasons for writing off the assets (sale,
liquidation, giving under a financial lease, non-monetary
contributions in companies, transfer without consideration,
etc.). (3) Resident legal persons without state or municipal participation shall
declare before the tax office of their seat within one month from the
entry into force of this Act the existence of the circumstances
mentioned in paragraph 1. § 4. (1) The determining of the amount of the dividend for the state or
the municipalities from the remainder of the profit after taxes of single-
person limited liability companies and single-person joint-stock
companies with state or municipal participation shall be made by the
Council of Ministers, respectively by the municipal council. The
procedure for determining and payment of the tax shall be determined
with rules of the Council of Ministers. (2) The distribution of the dividend in companies with state or
municipal participation shall be made in accordance with the
Commerce Act, the Accountancy Act and the companies' by-laws. § 5. (1) Companies with more than 50 per cent state and/or municipal
participation shall also pay a tax on the increase of the wage fund
quarterly or bi-annually. (2) The increase of the charged amounts for wages during the
respective period (quarter or half-year) in relation to a determined base
amount of the funds shall be taxed under the following schedule: Percentage of growth of the Tax rate dependent upon the reached average monthly gross wages during the reported quarter or semester (in %) wage funds in relation to the base up to 3 minimum wages up to 4 minimum wages up to 5 minimum wages up to 6 minimum wages up to 7 minimum wages above 7 minimum wages up to 2 - - - - - - above 2 to
3 - - 40 60 120 240 above 3 to
4 - 10 60 80 160 320 above 4 to
5 - 20 80 100 200 400 above 5 15 40 100 150 300 600 (3) The tax rates as per paragraph 2 are divided in six groups in
accordance with the amount of the minimum wages for the country
during the reported quarter of the year. When a bi-annual period has
been adopted the average monthly amount of the minimum wage for
the country shall be applied during the reported semester. (4) The tax rates provided by the schedule in paragraph 2 shall be
applied separately for the sum of the increase of the wages which falls
in different brackets. In case of growth of the wage fund above 2,
respectively 3, 4 or 5 per cent, the once taxed sum shall be deducted
from the sum which is subject to taxation in the next bracket. In this
case only the difference between the two sums shall be taxed. (5) The due tax shall be paid by the 15th of the month following the
end of the reporting period (quarter or semester). (6) The procedure for establishing the amount of the charged wages
and the base wage amounts, as well as the manner for applying the
schedule provided in paragraph 2 shall be determined by the Council
of Ministers. § 6. The persons enjoying upon entry into force of this Act preferences
pursuant to Article 87, paragraph 6 of Decree 56 on Economic
Activity, shall apply the provisions of this Act until their losses have
been exhausted or until the five-year period from their arising has
expired. § 7. (1) The provisions of Article 58 shall apply to companies
regardless of the date of their privatisation from the date of entry into
force of this Act until 31 December 2001. (2) The provision of paragraph 1 shall not apply to independent parts
of enterprises, unfinished construction projects and enterprises which
are purchased pursuant to Article 25, paragraph 3, Article 34,
paragraph 1, and Article 35 of the Transformation and Privatisation of
State and Municipal Enterprises Act. (3) Legal persons which are eligible to apply the provisions of Article
58 in the course of a calendar year shall choose which calendar year
shall be first within the meaning of paragraph 1, item 1 of the said
article. (4) Companies privatised prior to the entry into force of this Act shall
apply the provisions of Article 58 for the remainder of the five-year
period. (5) The provisions of Article 60 shall be applied by companies with
foreign participation who have made investments until 2001. § 8. (1) A State Energy Resources Fund is hereby established for
financially assisting the single-person companies from the energy
sector working under fixed prices of the energy and energy resources. (2) The raising, spending and control of the State Energy Resources
Fund funds and its management shall be performed under a procedure
to be elaborated by the Council of Ministers. The State Energy
Resources Fund shall receive the existing funds from the extra-
budgetary account of the Energy Resources National Fund. (3) For five years the single-person companies with state or municipal
participation from the energy sector shall contribute to the State
Energy Resources Fund the due tax on profits. § 9. The annual depreciation norms established by Article 15,
paragraph 2, may be greater in cases determined with a decision of the
National Assembly based upon proposed by the Council of Ministers
minimum depreciation norms for individual groups of assets in
concrete industries. The decision shall indicate the time period for
applying the thus determined depreciation norms. § 10. The following are hereby repealed: 1. Decree 56 on Economic Activity; (published State Gazette
No. 4 of 1989; corrigendum No. 16 of 1989; amended Nos. 38,
39 and 62 of 1989; 21, 31, and 101 of 1990; 15 and 23 of 1991;
corrigendum No. 25 of 1991; amended Nos. 47, 48 and 62 of
1991; 60 of 1992; 84 and 93 of 1993; 63 of 1994; 53 and 87 of
1995; 20 and 28 of 1996) 2. Article 20 of the Political Parties Act (State Gazette No. 29
of 1990, amended 87 of 1990); 3. Articles 26 and 27 of the Regulation-Law on the People's
Chitalishta (State Gazette No. 42 of 1945; corrigendum 152 of
1945); 4. Articles 16 and 18 of the State Insurance Institute Act (State
Gazette No. 54 of 1969, amended No. 85 of 1970 and 90 of
1993); 5. Article 279 of the Commerce Act (State Gazette No. 48 of
1991, amended Nos. 25 of 1992, 61 and 103 of 1993, 63 of
1994, 63 of 1995 and 42 of 1996). § 11. In Article 37 of the Co-operatives Act (published SG 63 of 1991,
amended 34 and 55 of 1992 and 63 of 1994) the following
amendments are made: 1. paragraphs 1, 4, 5, and 6 are repealed; 2. in paragraph 2 the word "taxes" is deleted. § 12. In the State Savings Bank Act (published SG 95 of 1967,
amended No. 21 of 1975; 83 of 1978 and 41 of 1985) the following
amendments are made: 1. Articles 16, 32 and 36, paragraph 1 are repealed. 2. In Article 27 the words "and premiums on domestic debt
state bonds". are deleted. § 13. In § 18 of the Transitional and Final Provisions of the Income
Tax Amendment Act (SG 38 of 1994) the words "as of 1 January 1994 shall be determined in accordance with Decree 56 on Economic
Activity" shall be replaced by "shall be determined in accordance with
the Tax on Profits Act". § 14. The following amendments are made in the Accountancy Act
(....): 1. § 5 is amended as follows: a) in paragraph 1 the words "provided that reasons o
refuse the payment do not exist" shall be deleted. b) paragraph 2 is repealed. 2. § 7 is repealed. § 15. The persons whose profit from economic activities in the free
economic zones is exempted from tax on profits for the first five years
under the repealed Article 111 of Decree 56 on Economic Activity
State Gazette No. 84 of 1993) shall continue to enjoy the exemption
for the period for which it was granted. § 16. The Council of Ministers shall issue rules to implement this Act. § 17. The implementation of this Act is assigned to the minister of
finance. § 18. This Act shall enter into force as of 1 January 1996. This Act was adopted by the 37th National Assembly on 19 June 1996, adopted a
second time on 4 July 1996 pursuant to Article 101, paragraph 2 of the Constitution
and the State Seal was affixed hereto. For the Chairman of the National Assembly: Nora Ananieva