Social partners fail to agree on poverty line and VAT for restaurants

The National Council for Tripartite Cooperation, which includes representatives of the trade unions, employers and the government, on Otober 25 did not reach full agreement on the poverty line in 2024 and on the package of changes to four of the six tax laws on which there are divergent views from trade unions and employers.

The meeting was chaired by Deputy Prime Minister and Minister of Foreign Affairs Mariya Gabriel. Finance Minister Assen Vassilev arrived at the end. He gave the assurance that the package of tax changes would enter the National Assembly on 6 November.

CITUB trade union (Confederation of Independent Trade Unions in Bulgaria) did not support the government's proposed poverty line of BGN 526 for 2024, which is BGN 22 or 4.4% more than this year. The incomes of a fifth of the Bulgarians are below the poverty line. According to CITUB, it should be BGN 646. This indicator is linked to disability benefits, but also to all social benefits. Funds for the disabled will increase to BGN 661 million next year, compared to BGN 633 million this year.

The government is also proposing to introduce a materiality threshold for the cases in which whistleblowers report tax frauds. They should receive a portion of the amount collected as a reward. The Finance Minister motivated the idea with the fact that often the whistleblower alerting about a tax fraud of a huge amount is a person who works in the offending company. However, reporting the offence may leave the whistleblower jobless and could even endanger their life, Vassilev said.

One of the key issues remains the VAT rate for restaurateurs - whether it should remain at 9% or, as the government proposes, return to 20%. The proposed changes keep the zero rate for bread and flour producers and traders until the middle of next year.

Changes to the Personal Income Tax Act broaden the scope of the term "remunerations", which is also a concern among social partners - the government's motive is that this will deal with hidden employment contracts, where not all social security contributions are paid into the treasury, etc., which will lead to a significant increase in taxes and social security contributions on the part-time employment contracts. It also gives the option, if a receipt is not issued, for a person not to pay their bill.

After the changes are considered by the Tripartite Council, they will be submitted in the Council of Ministers and the National Assembly.

Images by BGNES