KPMG tax news focuses on the new requirement for declaring cash at hand and receivables from owners and employees.
This issue of tax news focuses on one of the changes in the tax legislation, introduced with the State Budget Act for 2023, promulgated in issue 66 of the State Gazette of 1 August 2023. The State Budget Act amended the provisions of the Value Added Tax Act (VAT Act) in the area of accounting related obligations of the VAT registered persons. The changes introduce a new reporting obligation for VAT registered persons, entities within the meaning of the Accountancy Act (AA).
Reporting obligation
VAT registered persons – entities under the AA, are obliged to report on a quarterly basis the available cash at hand, the amount of the receivables from (including provided loans to) individual owners, employees, staff and persons hired under management agreements, as well as related to employee advances, where the total amount of both the cash at hand and these receivables exceed the threshold of BGN 50,000 as of the end of the respective quarter.
Reporting mechanism
Even though the new reporting obligation is under the provisions of the VAT Act, reporting to the revenue authorities is made with the return under Article 55, para 1 of the Personal Income Tax Act (PITA) and Article 201, para 1 of the Corporate Income Tax Act (CITA), filed on a quarterly basis.
Reporting deadline
The quarterly returns under Article 55, para 1 of the PITA and Article 201, para 1 of the CITA should be filed by the end of the month following the reporting quarter.
First reporting period and application of the provisions
The third quarter of 2023 is the first reporting period for cash at hand and receivables from owners and employees with total amount above BGN 50,000. Based on the provisions of the State Budget Act for 2023 there is an extended deadline of 14 November 2023 for providing the information for the first reporting period.
The provisions of the PITA and CITA are not currently aligned with the extended deadline of 14 November 2023 for the first reporting period for filing information for cash at hand and receivables from owners and employees. This raises the question of whether the extended deadline applies to the information that should be reported with the quarterly returns based on the provisions of the CITA and the PITA or applies only to the reportable cash at hand. Currently, the revenue authorities have not published either the templates of the quarterly returns updated with the new reportable information under the State Budget Act for 2023, or any guidance with this respect.
Irrespective of the unclarities about the practical application of the provisions, tax liable VAT registered persons concerned, may prepare for the new requirement for reporting cash at hand and receivables from owners and employees with the appropriate settings of the software used, changes of the processes and/or procedures and others, to ensure the quick and reliable collection of the reportable information.
KPMG Bulgaria team will watch for any developments with respect to reporting cash at hand and receivables from owners and employees so that we inform you accordingly.
For information
Alexander Hadjidimov
Director, Tax
Tel.: +359 (2) 9697 700
Rumyana Staneva
Manager, Direct Taxes
Tel.: +359 (2) 9697 700
