AFTER some teething troubles, the National Revenue Agency (NRA) is sending a message that it hopes to add value to revenue collection in Bulgaria.

The NRA was launched at the beginning of 2006. The body has taken over most of the functions of the tax administration as well as the role of the National Social Security Institute.

Set up by Bulgaria in the light of a proposal by the International Monetary Fund and as part of a wider project to improve revenue collection, the saga of the NRA has seen concern expressed several times about delays in its establishment. In 2005, it was not clear whether the January 2006 deadline would be met for the setting up of the agency.

When on the first day of its operation, the agency's IT system collapsed, doubts about its capacity appeared vindicated, but its leaders remained optimistic.

At a January 4 news conference, agency deputy executive director Stoyan Markov said that with the development of the NRA, collection of revenue and social security payments due to the state would improve to the extent that they would total an additional billion leva by 2009.

Markov said that revenue collection would already improve this year, with cross-checking of tax and social security payments expected to lead to a better picture of monies owed.

According to Bulgarian news agency BTA, NRA executive director Maria Mourgina said that the agency would collect income tax, value-added tax  (VAT), patent taxes and corporate taxes, as well as health insurance and pension contributions, and, in addition, mandatory pension insurance payments, as well for other funds, including the teachers' pension fund.

From now on, notifications for registration of labour contracts, as well as statements on social and health insurance contributions, must be submitted to the agency's directorate of corporate registration. People who are self-insured will also register at the directorate. Statements on the commencement or termination of a labour contract must be submitted to the directorate. Notices of liquidation or transformation of corporation, which previously had to be filed with the National Social Security Institute, must be submitted to the territorial offices of the NRA, she told the news conference.

Local taxes and fees, as well as taxes on vehicles, will now be paid to municipalities, not to the tax administration.

The agency has 15 offices in Sofia, previously used by the tax administration. From now on, taxes may only be paid by bank transfer.

Within days of its launch, the NRA faced two major challenges, on January 10 and January 14, when patent and VAT declarations were due.

In the first two days of operations, the NRA assisted 40 000 clients, including 22 000 who visited the NRA offices in Sofia. According to the agency, most people who came to the NRA in the first two days were there to arrange their social security documents or to submit annual income declarations.

After the collapse of the IT system, Mourgina said that new software was to be put into use, replacing the software taken over from the former tax authority and the National Social Security Institute. Tests were being done, and use of the new software would begin as soon as they were completed, she said.

Mourgina told journalists that new tax laws would be introduced later this year.

Some changes to the Corporate Income Tax Act came into effect on January 1. The tax on corporate representative costs was lowered from 17 per cent to 10 per cent. The rate of a form of "perks tax" levied by Bulgaria, on corporate spending on recreational activities and on providing food for employees, is now 12 per cent, while all other "social costs" paid by companies will be taxed at a rate of 15 per cent.

The amendments were introduced by the Finance Ministry last year in the hope that they would encourage businesses to shift towards in-kind social spending rather than giving cash grants to employees.

Other amendments provide for the tax on maintenance and repair of vehicles used by company management to be 10 per cent. Company spending on public transport for employees is not taxable.

The rate of corporate profit tax has remained unchanged, at 15 per cent.