Corporate tax on the annual taxable profit
Corporate tax on the annual tax profit
Corporate tax is levied on:
....The profit of local legal entities;
....The profit of local legal entities, which are not traders, including organizations of religions, from transactions under Article 1 of the Commercial Act, as well as from leasing movable and immovable property;
...The profit of foreign legal entities from a permanent establishment in the Republic of Bulgaria
Pursuant to Article 2, par. 2 of the Corporate Income Tax Act (CITA) the unincorporated entities and the insurance funds established pursuant to Article 8 of the Social Security Code are treated as legal entities.
Who pays corporate tax:
...The entities liable to pay corporate tax are:
...The local legal entities – trade companies;
...The local legal entities that are not traders – for their profit from transactions under Article 1 of the Commerce Act, as well as from leasing of movable and immovable property;
...The local unincorporated associations unincorporated entities and security agencies established pursuant to Article 8 of the Social Security Code;
...The foreign legal entities that carry out economic activity in the country from a permanent establishment
...The foreign unincorporated associations, which carry out economic activity in the country from a permanent establishment
Corporate tax is not paid by entities liable to taxation only with alternative taxes for the respective activity specified in Part Five of CITA. These are the enterprises funded by the budget, the organizers of gambling games and the entities engaged in ships’ operation activities. Pursuant to Article 218, Para. 2 of CITA, the organizers of gambling games and the entities engaged in ships’ operation activities are subject to corporate taxation for all remaining activities except for the ones subject to alternative taxation. Therefore, for the activities outside those subject to alternative taxation, these entities are subject to corporate taxation.
Laws
Corporate taxation is regulated by the Corporate Income Tax Act (CITA).
Tax base
Pursuant to Article 19 of CITA, the tax base for assessment of the corporate tax is the tax profit.
Tax rate
The tax rate for the corporate tax is 10% (Article 20 of CITA).
Deadlines for declaring and payment
By 31 March of the next calendar year – filing of the annual tax return;
By 31 March of the next calendar year – payment of the corporate tax after deduction of the advance payments.
Declaring:
The annual tax return is filed by the taxable entities or by their authorized representative in the Territorial Directorate of the National Revenue Agency competent for the place of registration.
Documents, which should be filed together with the annual tax return
Annual financial statement
Pursuant to Article 92, Para. 3 of CITA the annual financial statement, including the attachment thereto, is submitted together with the annual tax return.
The annual financial statement and the attachments thereto are prepared in compliance with the requirements of the Accountancy Act and the applicable accounting standards. Pursuant to Article 26, Para. 3 of the Accountancy Act, the form, structure and contents of the components of the financial statement are developed in compliance with the applicable accounting standards (National Standards for Financial Statements for Small and Medium-Sized Enterprises or International Accounting Standards).
Report pursuant to the Independent Financial Audit Act:
Enterprises whose annual financial statements are subject to mandatory financial audit pursuant to the Accountancy Act, submit also a copy of the report pursuant to the Independent Financial Audit Act. If the independent financial audit has not been completed by 31 March of the next year, the auditor's report is submitted additionally but not later than 30 June of the next year, together with a copy of the annual financial statement verified by a registered auditor (Article 92, Para. 3 of CITA)
Pursuant to Article 92, Para. 4, when there is a difference between the annual financial statement accompanying the annual tax return and the annual financial statement verified by the registered auditor, and this difference leads to a change in the already declared tax financial result, then by 30 June of next year the taxable entity files a corrective return, declaring the reasons for the difference.
The tax return is submitted:
In the office of the National Revenue Agency where the taxable entity is registered
By return mail
Via Internet
If you have a universal electronic signature, you have to:
Fill in and file an application for electronic filing of tax returns,
Fill in and make confirmation in your user profile in the “Electronic Filing of Tax Returns” system.
See more information for filing tax returns for corporate taxation via Internet.
Pursuant to Article 92, Para. 5 of CITA, a taxable entity that files an annual tax return and the annual statement of operations thereto by 31 March of the next year electronically, and that pays corporate tax within the same period, can get a reduction of 1 % of the annual corporate tax due but not more than BGN 1,000.
Payment of the corporate tax
Via banks
Via Internet
By postal order for tax payment
Article 94, Para. 1 of CITA stipulates that any overpaid corporate tax may be deducted from succeeding advance and annual tax payments for the same tax, as of 1 January of the year succeeding the year for which the corporate tax was overpaid. The deduction is done by the taxable entity. When after filing of the annual tax return it is established that the taxable entity has unreasonably deducted corporate tax, interest is due on any unpaid advance payments (Art. 94, para.2 of CITA).
Pursuant to Article 9 of CITA, interest is due on any taxes, unpaid within the due period, including the advance payments, pursuant to the Act on Interest on Taxes, Fees and Other State Receivables.
Advance corporate tax payment
Advance payment is not made by:
Taxable entities whose net sales income for the previous year is not exceeding BGN 200 000.;
Newly incorporated taxable entities for the year of their incorporation, except for those that are newly established as a result of transformation as per the Commercial Act
The advance payments for corporate tax are monthly and quarterly.
Monthly advance payments – they are made by taxable entities that have tax profit for the preceding year.
When the tax profit for the preceding year exceeds the tax profit for the year before the preceding one the monthly advance payment for April is increased with an amount defined based on the formula as per Art. 86, Par. 2 of CITA.
When the tax profit for the year before the preceding one exceeds the tax profit for the preceding year the monthly advance payment for April is reduced with the amount defined based on the formula as per Art. 86, Par. 3 of CITA.
Quarterly advance payments – they are made by taxable entities that have no obligation to make monthly advance payments.
Deadlines for payment
Monthly advance payments - until the 15th day of the current month;
Quarterly advance payments - until the 15th day of the month succeeding the quarter. No quarterly advance payment is made for the fourth quarter.
Declaring
Return is filed only for reduction of the advance payments pursuant to Article 88, Para. 1 of CITA.
Deadlines for declaring:
There is no explicit deadline for filing of the tax return to reduce advance payments, however, one can benefit from the reduction of the advance payments only after the tax return has been filed.
Download tax return:
Tax return to reduce advance payments pursuant to Article 88, Para. 1 of CITA
The tax return is filed:
At the office of the National Revenue Agency where the taxable entity is registered
By return mail
Via Internet (when this service becomes available)
Sanctions
Pursuant to Article 261 of CITA a taxable entity that fails to file a tax return under this Act, or fails to file such within the due period, or fails to state or misstates any data or circumstances leading to underassessment of the tax due or to unjustified reduction, remission of or exemption from tax, is subject to a property sanction of BGN 500 to 3,000. Any repeated violation (§1, item 44 of the Additional Provisions of CITA) under Para. 1 is punished by a property sanction of BGN 1,000 to 6,000 (Article 261, Para. 2 of CITA.
Pursuant to Article 262 of CITA a taxable entity that fails to file any supplement to the annual tax return or that states any untrue data or circumstances in any such supplement, is subject to a property sanction of BGN 100 to 1,000. Any repeated violation is punished by a property sanction of BGN 200 to 2,000.
According to Article 263 of CITA a taxable entity that reports any business transaction in breach of his accounting policy and this leads to incorrect assessment of the accounting financial result of the said entity, is subject to a property sanction of BGN 100 to 1,000 for each such breach. Any repeated violation is punished by a property sanction of BGN 200 to 2,000.
A taxable entity, that fails to fulfill its obligations under Article 92 Para. 3 or 4, is subject to a property sanction of BGN 500 to 2,000 and, upon a repeated violation - of BGN 1,500 to 5,000 for each unfulfilled obligation. (Article 276 of CITA).
Pursuant to Article 278 of CITA, the statements establishing the violations are drawn up by the authorities of the National Revenue Agency, and the penalty decrees are issued by the Executive Director of the National Revenue Agency or by an official authorized by him. The ascertainment of violations, the issuing, the appealing against and the enforcement of penalty decrees are carried out under the procedure of the Administrative Offences and Sanctions Act.