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Families with children with an official income of up to BGN 510 per month will receive child benefits and tax relief for each of their members if the parents work or have reported other taxable income to the NRA. Higher-income families will also receive support, but with a tax allowance of BGN 450 per child per year. This is the compromise version written in the draft Budget 2021, approved by the deputies in the second reading first in the Budget Committee on Thursday.
The only unknown so far is how much the generous state budget measure will actually cost. Dramatically increases state financial support for child care.
Initially, GERB proposed that the 1,250,000 children receive child benefits next year, and not just 570,000 as now. After the idea received strong criticism and accusations of populism, GERB withdrew, arguing that the measure was “offensive” to wealthy parents and therefore suggested that the allowances be kept only for the poorest families. In this case, however, it was proposed to increase the amount of the payment itself, from BGN 40 per month for a child to BGN 50, as well as to raise the income criterion to receive the benefit, to a maximum of BGN 650 per month for member. the family.
However, this option also met with strong public resistance. Therefore, at the suggestion of the IMRO, an actual tax allowance for children is additionally introduced, with which the tax base can be reduced to 4,500 BGN per year per child. This means up to BGN 450 discount for one child per year, BGN 900 for two and BGN 1,350 for three or more children. Currently, there is a similar allowance in the law on personal income tax, but it amounts to BGN 20 per child per year.
A sharp jump in financial support for child care
The new much higher tax break will be available to all parents, including those who receive allowances, explained budget committee chairman Menda Stoyanova.
Therefore, the maximum assistance that lower income parents will receive in 2021 is BGN 930 per child. According to the previous version, the aid would be 600 BGN. For a family with two children and an income of each of the members of up to 410 BGN, next year 180 BGN will be available.
The deputies agreed to maintain the current conditions to receive the children in their entirety. According to them, families with a monthly income of up to BGN 410 receive BGN 40 per child for each member, BGN 90 for two, BGN 135 for three, BGN 145 for four and BGN 145 for each subsequent child. the family increases by BGN 20. Households with incomes between BGN 410 and BGN 510 receive 80% of the listed benefits amount, and those with more than BGN 510 do not receive financial support to raise children.
“We want to distinguish between the support that is intended for the really needy and the taxes that encourage responsible parenthood in Bulgaria”, Menda Stoyanova said.
In 2020, some 570,000 children receive benefits, and all the others up to 1,250,000 children in Bulgaria do not. In the initial version of GERB, all children were expected to receive the current amount of benefits. After the idea of universal allowances was abandoned, GERB proposed an option to increase the payment from BGN 40 to BGN 50 for one child, from BGN 90 to BGN 110 for two children, etc. It was also proposed to increase income to receive 100% of the aid – up to BGN 510, and 80% – up to BGN 650.
The big problem with child benefits is that the state does not currently have a working standard to distinguish families who really need support from everyone else. That is why almost half of the children in Bulgaria receive allowances, about 570,000 out of a total of 1,250,000. The reason is that the differentiation is made on the basis of the official income of the parents declared to the ANR, and often they do not coincide with the real ones. As a result, a family with an income of more than BGN 510 per month is now “rich” for each of its members. According to official data from the National Revenue Agency for 2019, 91.5% of people with taxable income receive up to BGN 2,000 per month and 72%, up to BGN 1,000.
Home delivery with 9% VAT from December 1
As of December 1, 2020, the VAT rate for home delivery of homemade food will become 9%, the parliament has finally decided. This happened with the adoption of the second reading of the changes in the tax laws for 2021.
Initially, the reduced rate was expected to take effect on January 1, 2021, but in the plenary room, the chairman of the budget committee, Menda Stoyanova, of GERB proposed that this be done earlier, starting on December 1, this year. The correction was put to a vote by the president of the meeting, Valeri Simeonov, arguing that the closure of the establishments is expected before the originally scheduled deadline for the entry into force of the measure and that it will not be effective.
The 9 percent VAT rate on household food supplies will apply until December 31, 2021. However, it will not apply to supermarket chains.
The food vouchers are now BGN 80.
The monthly limit for food stamps will be increased: from 60 to 80 BGN, the deputies also decided. They rejected the proposals of the patriots and the left to increase the monthly amount to 100 BGN.
The GERB admitted that the bonds have not increased since 2009, but said that these are the possibilities of the current budget.
The proposal of the separatist BSP deputies, now independent, to regulate vacation vouchers for the state to support the tourism sector was rejected.
The VAT rate remains at 20% for medicines.
MPs once again rejected BSP’s proposal to reduce the VAT rate to 9% for drugs included in the positive list and paid for by the health insurance fund. “Bulgarians pay too much out of pocket for medicines, the health insurance reimbursement system is not effective. Medicines in Bulgaria are among the most expensive in Europe and 19 countries have lower rates,” said Georgi Gokov, left .
Sales software – on a voluntary basis
Finally, the change was voted, according to which the requirements for the software for the management of sales at points of sale (SUPTO) to be applied voluntarily by the company and are not mandatory. Businesses that voluntarily agree to meet the higher requirements will receive a faster VAT refund from the NRA and will not be closed on the first violation related to not issuing a receipt.
A tax break is introduced for repairs.
The deputies finally approved the introduction of a tax relief for the renovation of the apartment.
Payments made during the year for works related to improvements or repairs of a property for a total amount of up to BGN 2,000 will be deducted from the annual tax base. As the income tax in our country is 10%, the maximum deduction can be 200 BGN
The conditions for its use are that the property is in Bulgaria, that it is not part of the assets of the company, and that the client has a document from the master for the paid labor for the repair, which contains the details of the Law of Accounting (number, date of issue, names of the teacher or the company, their PIN or code of the Commercial Registry). You must also present a payment document: tax receipt, receipt, bank order or other.
The relief will be available for the first time for income from 2020, that is, in the fiscal year from January to April 2021.
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