BULGARIA. Duty free retailers will pay a sales tax instead of the traditional profit tax and turnover fee under a planned new duty free trade bill.
The plan is part of sweeping reforms of the country’s duty free trade about to be implemented by the Finance Ministry, local media said yesterday.
Retailers will pay a 4% tax on sales but will no longer pay 19.5% tax on profits nor the 2% levy on turnover they currently pay Customs each month.
The Association of Duty Free Operators and the Finance Ministry agreed on the change, which will be incorporated in a draft duty free trade bill now being prepared.
Retailers also proposed offering bank guarantees instead of the currently clumsy system whereby they pay the customs dues and the excise duty is paid back to them within a month. Besides being unwieldy, the system also undermines the retailers’ working capital they contended. But the system will not change for now.
Retailers also agreed to be connected online with the Customs Agency and to install surveillance cameras at the shops if the state pays for them.
The ten association members, which account for 90% of the country’s duty free turnover, said that sales in 2003 increased by +30% year-on-year. They reported a turnover of €64 million (US$78.5 million) for 2003, up from €48 million (US$58.9 million) for 2002.
Background: At the end of 2003, Finance Minister Milen Velchev issued permits to 14 companies to operate 49 duty free shops, thereby bringing an end to the government’s controversial plans to close down all land border duty free shops. Velchev had tackled the duty free trade in what he claimed was an effort to crack down on the shadow economy and smuggling. Companies that were eventually awarded the permits were Aidatour, Amfora, Belatour, BNK, Vassilevi Bros, Deneb, Corecom Princess, Varna Airport, Burgas Airport, Sofia Airport, Panchatantra, Seacom, Sofcom and Transimpex.
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