PM Borissov Promises 11% VAT Reduction for Restaurants
May 12 (BTA) - Prime Minister Boyko Borissov and representatives of restaurant, catering and entertainment establishment businesses agreed here on Tuesday that the VAT will be reduced from the standard 20 to 9 per cent for catering and entertainment establishments registered under the Tourism Act. The lower VAT is expected to become effective immediately and remain until the end of 2021.
The agreement came on the second day of meetings between the two sides and was first made public by the government press office and then by the Prime Minister himself, who held a special news briefing together with the power-sharing United Patriots.
The catering and restaurant sector was represented at the meeting by officials of the Association of Catering Establishments in Bulgaria and the Bulgarian Hotel and Restaurant Association.
Bulgaria has a flat VAT of 20 per cent, however some tourist services have enjoyed a lower VAT of 9 per cent for years, more specifically package tours. Finance Minister Vladislav Goranov has been consistently opposed to having a differentiated VAT, for foods, restaurants, or anything for that matter.
The Prime Minister said that there is a political risk in the decision but it was made to support the restaurant businesses as they struggle with the losses caused by the pandemic.
"It is a measure that could produce good results in the long run. Everything is in our hands," the Prime Minister said, adding that this change should bring to light the entire restaurant sector.
Borissov also said that his own GERB party are against a lower VAT, including the Finance Minister and the chair of the parliamentary budget committee, Menda Stoyanova, and have figured out that the 9 per cent VAT will open up a 150 million leva gap in the budget.
The lower VAT, however, is a political decision that has been made by the GERB parliamentary group, said the Prime Minister.
The VAT revenue will be monitored closely and analyzed on a monthly basis and the lower rate could remain forever if it indeed brings to light the entire restaurant business sector and does not cause VAT proceeds to drop significantly.
Borissov said that the tourist sector now has a chance that a 9 per cent VAT can generate more revenues than a 20 per cent VAT.
The proposal for a lower VAT will be submitted to Parliament on May 13 by the MPs of GERB and the United Patriots.
Borissov said his party will also propose a lower VAT for books and cultural activities. He added that GERB have long been considering this and intend to make it permanent.
He also commented that he can't wait to see if the 11 per cent decrease in VAT will cause prices to come down by as much.
And child commodities as well
Shortly after the Prime Minister's news briefing, the Movement for Rights and Freedoms (MRF) held their own briefing to declare their support for the 9 per cent VAT for restaurants. They said all commodities for children aged 0-3, including food and clothing, should be included in the lower VAT package and promised to table the respective proposal to the legislature. They argued that it is a way to address the demographic crisis in Bulgaria.
MRF's Yordan Tsonev said they were happy to see, a year later, the power-holders support their call for a 9 per cent VAT for books.
New cash registers next year
The Prime Minister and the catering businesses also agreed to postpone by a year, as of March 2021, the entry into effect of a government ordinance that
requires of all businesses to deploy a new system for reporting their turnover and purchase new cash registers. The government has been trying to push through this ordinance for two years now but it is strongly opposed by businesses and even triggered street protests last year.
The changes agreed at Tuesday's meeting with the Prime Minister will be submitted to the Legislature to be turned into law by MPs of the ruling GERB party, said the government press office. LN/RY