18.05.2022

WHAT ARE THE GOVERNMENT'S ANTI-CRISIS MEASURES AGAINST INFLATION?

Zero percent VAT on bread, updating of pensions by nearly 20%, higher tax breaks for families with children and discounts on fuel, including petrol and diesel - these are just some of the measures in the anti-crisis package adopted during yesterday's coalition Council, the press service of the Council of Ministers announced. The measures are aimed at supporting Bulgarian citizens and businesses in the face of the unprecedented crisis caused by the war in Ukraine.

According to the ruling coalition partners, pensions will be updated from July 1st, instead of the current 6.1%, by an average of 20%. This includes a increase in all pensions by BGN 60 and an additional percentage increase. According to the so-called Swiss rule, the pensions of 770 thousand pensioners will be recalculated from October 1, and from 2008 each pension will be recalculated with 100% growth in average insurance income or 100% inflation, depending on which is more favorable and which is the higher amount of the pension for the particular pensioner.

The decisions of the ruling coalition lead to a drastic increase of over 55% of the minimum pension, which at the beginning of last year was BGN 300, and from July 1 will be BGN 467.

The anti-crisis package also provides compensation for high fuel prices. All citizens until the end of the year will be able to take advantage of a discount of BGN 0,25 per liter for petrol 95 and diesel, methane and propane-butane.

For a period of one year the VAT on bread will be reduced to 0%, and for the same period the VAT on wine and beer will be refunded to 20%.

With regard to heating, VAT on heating and hot water is expected to be 9% within one year. It will also be reduced to 9% VAT on natural gas for end users/household needs for a period of 1 year. It is exempt from excise duty on electricity, natural gas, methane.

In support of families with children, as a long-term measure it is planned to increase the amount of tax relief for children from BGN 4,500 to BGN 6,000 per year, and it will be possible to use it every three months during the year.

The package of anti-crisis measures also includes increasing the threshold for mandatory registration under the VAT Act from BGN 50,000 to BGN 100,000; taxation of excess profits of electricity in order to compensate non-household consumers; electronic vouchers for the convenience of employees, as their total amount will be increased to BGN 1.2 billion; reduction of the interest rate to 8% for overdue payments to the state, municipalities, utilities, etc.

A recommendation will be made to the Energy and Water Regulatory Commission (EWRC) for two rates for electricity, water, heating and gas, based on consumption per household, with the aim of introducing a reduced tariff for less consumption. The VAT rate for books continues to be lower at 9%.

Most of the measures will be settled in the forthcoming budget update in the middle of this year, with different deadlines for entry into force and implementation. The necessary legislative changes will also be made.