Corporate tax on the annual taxable profit

Corporate tax on the annual tax profit

By § 5 of the Transitional and Concluding Provisions of the Act on the State Budget of the Republic of Bulgaria (LSBRB) for the year 2012, a coefficient was approved for  determining the monthly advance payments for corporate taxes as per the Corporate Income Tax Act (CITA), amounting to 1,1.

Corporate tax is levied on:

.... The profit of local legal entities;

.... The profit of local legal entities, that 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, Para.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 Commercial Act, as well as from leasing of movable and immovable property;

.....The local unincorporated entities and the insurance funds 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 entities that 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 – submission of the annual tax return;

….. By 31 March of the next calendar year – payment of the corporate tax after deduction of the advance payments has been made.

Declaring:

The annual tax return is submitted by the taxable entities or by their authorized representative in the Territorial Directorate of the National Revenue Agency where the entity is registered.  

Download tax return:

Annual tax return as per Art.92 of CITA, with annexes and instructions for use

The tax return is submitted:

….. In the office of the National Revenue Agency where the taxable entity is registered

….. By mail with return receipt

….. Via Internet

If you own a universal electronic signature, you have to:

….. Fill in and submit 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.

Pursuant to Article 92, Para.5 of CITA, a taxable entity that submits an annual tax return and the annual statement of operations thereto by 31 March of the next year electronically, and that pays the corporate tax due 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

The tax is paid:

….. Via banks

….. To state budget accounts for the TD of NRA where the taxable entity is registered

The payment can be made in any bank, by filling in a payment order (payment slip) for payment to the budget.

! Usually the banks deduct a fee for the transfers. This fee is lowest in the bank where the account of the respective TD (office) of NRA is.

See the list of the banks servicing the accounts of the National Revenue Agency.

….. Via Internet

For payment via Internet the following is required: a debit card and registration on the web pages of E-pay and NRA.  

….. By postal order for tax payment

The postal order should contain the address and the name of the respective TD (office) of NRA, the postal code, as well as the amount due.

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 submitting 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 Similar State Receivables.

Advance corporate tax payment

Advance payment is not made by:

1. Taxable entities whose net income from sales for the previous year does not exceed BGN 200,000;

2. 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 by an amount determined as per the formula under Art.86, Para.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 by the amount determined as per the formula under Art.86, Para.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

Declaration is submitted only for reduction of the advance payments pursuant to Article 88, Para.1 of CITA.

Download declaration:

Declaration for reduction of the advance payments pursuant to Art.88, Para.1 of CITA.

Deadlines for declaring: There is no explicit deadline for submitting the declaration for reduction of the advance payments, however, one can benefit from the reduction of the advance payments only after the declaration has been submitted.

The tax return is submitted:

….. At the office of the National Revenue Agency where the taxable entity is registered

….. By mail with return receipt

….. Via Internet (when this service becomes available)

Payment of the advance payments 

See above “Payment of the corporate tax”