Updated last 26.03.2021
The profit for the year that is generated by companies (legal entities) in Bulgaria is subject to 10% corporate tax. The procedure for the calculation, declaration and payment of the corporate tax is stipulated in the Corporate Income Tax Act (CITA).
According to CITA subject to corporate income tax is not the annual accounting profit of the company, but its annual profit for tax purposes, that is, the tax financial result. The tax financial result is determined by transforming the accounting financial result in the order and manner specified in this law, with:
1. the permanent tax differences;
2. the tax temporary differences;
3. other amounts in the cases provided for in CITA.
This means that certain expenses or income accounted for during the respective financial year are not recognised for tax purposes. Some of these income and expenses are not recognised at all, while some are not recognised in the year when they were accounted for, but are recognised later.
The most widely spread unrecognised expenses are those not related to the company’s business or those that are not justified with documents (i.e. without accounting documents, contracts, acceptance and submission protocols or reports, etc.). This means that it is possible for a company that reports accounting loss in a respective year to report profit for tax purposes in the same financial year, or vice versa – to be on accounting profit, but to be taxed for loss for the same financial year. This is why entrepreneurs should take into account the tax aspects of the income and expenses accounted by them when declaring their financial result for tax purposes and to consult specialists, if necessary.
How are the annual financial results declared for tax purposes?
Companies declare their financial result for tax purposes by filing an annual tax return (ATR) with the National Revenue Agency (NRA). All companies, except those that have had no operations during the respective year and which have no corporate tax payables, are obliged to file an ATR.
The ATR is filed in a standard form. The ATR form is approved by the Minister of Finance and is available here. To the Annual Tax Return there is also guidelines as to the filling-in of the ATR which are prepared by NRA experts.
Legal entities that have made mistakes in the filling-in and filing of the ATR have the right to file an adjusting ATR by 30 September of the same year.
The ATR for the respective calendar year is filed by 1 March until 30 June of the following year with the respective territorial directorate of NRA as per the company’s registration. The filing of the ATR with the NRA may be performed only electronically using a qualified electronic signature (QES).
The non-filing of the ATR in due time or filing an inaccurate ATR may result in an administrative sanction amounting to BGN 500 to BGN 3000. More serious violations are penalised with sanctions envisaged in the Penal Code (PC) and are prosecuted in accordance with the procedure set out in the Criminal Procedure Code (CPC).
When and how is corporate tax paid?
The payment of the corporate tax due is made within the ATR filing deadline – by 30 June of the year following the year that the filed ATR relates to.
Payment is made only via bank transfer to the accounts of the NRA.
|Important to know|
It is important to know that the different territorial directorates of the NRA have different bank accounts, which may be found on the website of the NRA. Furthermore, in the bank payment order companies should specify a special code for the specific tax due, as otherwise they risk paying other liabilities (if any).
Companies that have annual turnover for the year prior the previous one exceeding BGN 300 000 pay corporate tax in advance in quarterly instalments. The advance tax due by the companies with annual turnover for the year prior the previous one exceeding BGN 3 000 000 is paid in monthly instalments based on a forecasted taxable profit for the current year. The type and amount of the due advance payments is determined by the taxable persons (companies), who should submit a declaration for determining the advance payments within March 1 to April 15 of the current year.
In these cases the final corporate tax due after the end of the financial year is paid following deduction of the advance payments made during the respective year.
|For more information|
Additional information concerning the declaration and payment of the corporate tax and the filing of the ATR is available on the website of the NRA.