In Focus

Mandatory Security Made by Persons Participating in Transactions with Liquid Fuels

August 3, 2016

A recent amendment in the Value Added Tax Act introduces an obligation for the persons, performing transactions with liquid fuels with taxable base over BGN 25 000 to provide security to NRA. The change enters into force as of 6 August 2016.

1. Persons obliged to provide security

An obligation for provision of security arises upon:

- performance of taxable supplies of liquid fuels were the total value of the taxable base exceeds BGN 25 000 per month;

- performance of intra-Community acquisitions of liquid fuels that are not intended for own consumption where the total value of the taxable base exceeds BGN 25 000 per month, or

- obtaining of liquid fuels released for consumption within the meaning of the Excise Duties and Tax Warehouses Act (EDTWA) exceeding BGN 25 000 per month, except where security was provided on other ground.

Upon release for consumption under EDTWA, an obligation for provision of security arises only for the direct recipient of the transaction on which the release for consumption takes place.

Exception: The requirement for provision of security does not apply to persons who supply fuel for ships and aircraft, as well as to persons who supply fuel from outlets that transfer data for the quantities of fuel available over a distance connection to the National Revenue Agency.

2. Amount and term of the security

The amount of the security for the transactions listed above shall not be less than 20 % of the value of the transactions for the previous month, with a minimum of BGN 50 000.

If the taxable person did not perform such transactions during the previous month, the amount of the security shall be determined on the forecasted monthly average taxable base of the above transactions for a 12-month period, but not less than BGN 50 000.

The term of the security (deposit, bank guarantee or government securities) is 1 year.

The security shall be provided no later than 7 days before the transaction that exceeds the threshold under point 1 above. Upon change of the circumstances that define the amount of the security, the security shall be updated no later than 7 days before the change.

As long as the security is based on the indicators from the previous month, for the moment it is not clear whether the update shall take place 7 days before the end of the month or 7 days before the transaction that leads to the change. Detailed rules on the process of provision of the security are expected to be introduced in the Regulations for application of the VAT Act.

The persons who meet the conditions of point 1 above as at the entry into force of the change have 1 month to provide the collateral.

3.Sanctions

Non-compliance with the above requirement for provision of security is subject to sanctions equal to the amount of the non-provided security.

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