Bulgaria’s Finance Ministry is preparing a three-month amnesty period for arrears tax and social insurance payments that would allow companies and individuals to pay overdue amounts without incurring interest penalties, Bulgarian-language Capital Daily said.
The goal is to motivate companies in difficulty because of the crisis to pay up, according to the report, quoting two unidentified sources.
The one-off amnesty would net state coffers about 30 million leva (about 15 million euro), the report said.
The proposal has not been clarified fully and it was possible the amnesty might apply only to social insurance payment arrears.
The amnesty would require either a special act of Parliament or changes to the Tax Procedure Code.
The report said that MPs for Bulgaria’s ruling centre-right party GERB said that they would support the measure although they were not familiar with details of the bill, which was not yet ready.
The amount that would be forfeited in interest penalty payments is unclear because it was not known which taxpayers would take advantage of the amnesty. The report said that there were no public statistics on private sector debt to the state.
Labour and Social Policy Minister Totyu Mladenov floated a similar idea in spring 2010. At the time, his ministry said that unpaid social insurance obligations added up to about 300 million leva.
In August the same year, the Government officially abandoned the idea because of concerns that the version being considered at the time would be seen by the European Commission as unauthorised state aid.
Capital Daily quoted Ognyan Donev, head of the Confederation of Employers and Industrialists in Bulgaria, as saying that the idea had been raised with the Government four months ago.
A meeting had been held with Finance Minister Simeon Dyankov and National Revenue Agency head Krassimir Stefanov in January but the two top officials had lacked enthusiasm, the report said.
Donev, according to the report, said that "at first glance, the budget would lose because of interest on these debts not being collected, but on the other hand, the question arises what can be collected from a company that has declared bankruptcy?"
He said that a three-month period was too long. If a company had not arranged to pay by the 30th or 60th day, it would hardly be ready by the 180th day, Donev was quoted as saying.
At the same time, he called for the measure to be implemented as quickly as possible, because otherwise companies would be tempted to delay payments to the budget and use them as interest-free working loans until the amnesty was proclaimed.