In addition to the statement submitted during the meeting of the NSTS in the field of tax policy, the Confederation of Employers and Industrialists in Bulgaria presents to your attention the following proposals:
A/SPECIFIC PROPOSALS FOR CHANGES IN THE BILL FOR
LOCAL TAXES AND FEES
1. What we have already expressed position, in our opinion, the offered power of the cars is underestimated, and accordingly, very few persons will have the opportunity to take advantage of the offered preference. In our opinion, the power of 120 kW (163 hp) has established itself in Bulgaria as the limit above which the car becomes luxury (excise tax law). In this regard, we propose to change the planned power of 74 kW to 120 kW.
B/. SUPPLEMENT TO THE PROPOSALS MADE REGARDING
THE EXCISE POLICY ON TOBACCO PRODUCTS
In connection with the ZAD of ZADS submitted for public discussion, the Confederation of Employers and Industrialists in Bulgaria presents to your attention proposals from our members - companies from the tobacco industry, which we ask you to consider and include in the ZAD of ZADS, with the aim of easing the administrative burden burden on business and state administration, cacti and convergence of legislation with European directives in the field of excise taxation.
Reimbursement of excise duty paid on tobacco products that have been released for consumption, but which, under certain circumstances, cannot be sold on the market and have to be destroyed under customs control
In the tobacco industry, as in all other industrial and commercial activities, circumstances arise in which a certain product cannot or should not reach consumers, that is, be sold on the market. Although they usually incur losses from unrealized sales, such situations exist in practice. Due to the specifics of the supply chains of tobacco products, the excise tax is charged, due or paid upon release for consumption from a tax warehouse or upon importation/entry into the territory of the country. In some cases, however, the prerequisites and reasons why the goods, which have been released for consumption, cannot be realized, are established subsequently - as, by the way, is also valid for all other consumer goods. These reasons and prerequisites may arise in cases of establishment of irregularity or irregularity of the goods - for example, non-compliance with regulatory requirements for packaging and labeling, non-compliance with technical requirements or quality standards of the manufacturer. Also, situations of unsalable goods can also arise due to sudden changes in the market environment, excise rates that affect price levels, unexpected changes in legislation, etc. In this regard, the EU excise legislation provides for the member states to regulate the circumstances, conditions and order in which excise goods with paid excise duty are destroyed and the excise duty is refunded. The basic tax principle described in par. 9 of the Preamble of Directive 2008/118/EC dated 16.12.2008 is as follows: "As excise duty is a tax on consumption, excise duty cannot be collected for excise goods which, under certain circumstances, have been destroyed or irretrievably lost". Each EU country, in accordance with the possibility given in the Directive, has provided provisions on the manner of destruction of goods under administrative/customs control and refund or deduction of excise duty that becomes due. Until 2010, the ZADS was in some sense more harmonized with the Directive than it is at the moment, because then the possibility of destruction under customs control of excise goods with excise duty paid and affixed with a banderol, and subsequent refund of excise duty, was removed. We propose to restore the deleted provision and to include new text in the ZADS as follows:
Excise goods released for consumption, which cannot be sold on the market due to non-compliance with regulatory requirements or with the manufacturer's quality standards, are destroyed under the control of the customs authorities, and the paid excise duty is refunded in the order and manner determined by the implementing regulations of the law.
Products intended for research and product quality studies, marketing research products and samples
Test products intended for scientific research and product quality research only.
Manufacturers of tobacco products are obliged to prepare an annual report on the chemical ingredients of tobacco products intended for the domestic market and in the EU, as well as for sale abroad. Measurement and control are carried out by accredited laboratories from the Executive Agency "Bulgarian Accreditation Service" under the Minister of Economy and Energy. Manufacturers must periodically send products from each manufactured assortment for chemical analysis of the smoke to the accredited laboratory /for example, to the Institute of Tobacco and Tobacco Products at the Agricultural Academy/. In the case of cigarettes intended for export, often to register the ingredients in the respective country as well an analysis of the content, ingredients and chemicals is required. According to the provision of Art. 17, b. "c" of the current Directive 2011/64/EU of the Council of 21.06.2011, each member country "May be exempted from excise duty or reimburse already paid excise duty for the following:
c) processed tobacco /tobacco products/, which are intended only for scientific research and for research related to the quality of the product;"
Proposal for revision of Art. 21 of the ZADS:
Art. 21. (1) The following are exempted from payment of excise duty:
……. item 15 tobacco products that are intended only for scientific research and for research related to the quality of the product;
The order of exemption should be determined by the Regulations for the implementation of the law.
Test products/samples moving from the manufacturer to the trademark holder within the country.
The owner of the trademark assigns the production of tobacco products to a manufacturer - licensee with a license agreement. The owner of the trademark, who is the licensor, periodically performs tests regarding the conformity of the products in terms of the packaging design, the design of the product, the quality of the lens, conducts a tasting evaluation. Among the obligations of the manufacturer - licensee is the periodic sending to the licensor of samples - samples of the current production for quality control, including physical and chemical parameters and tasting evaluation for each of the licensed brands. When the production is intended for export, the test products, representing a random sample of the current production, are not affixed with a banderol, when such is not required, and are not in packaging that meets the ТТТИ and the Ordinance on the requirements for labeling, marking and external layout of tobacco products, because they are not intended for sale on the territory of the country. The same applies to the production of newly developed products for the purpose of testing quality parameters, when wrapping with a banderol is also not suitable.
According to the current ZADS and PPZADS, in cases where no sales price has been registered for the relevant tobacco product, the selling price is determined in Article 71, paragraph 1, item 1 of the PPZADS /for cigarettes/ - BGN 7.50 for 20 pieces. The excise duty due is calculated on this price.
We suggest that ZADS / PPZADS / regulate what these cases are and how such products can be moved on the territory of the country. We believe that in these cases there is an exemption for consumption, therefore an e-VAT should be issued and excise duty paid. Since it is impossible to put a label on the consumer packaging, we suggest that the packaging be marked with a "test product, not intended for sale" stamp, the arrival of the test products in the tax warehouse, as well as their removal, should be reported through the SEPI system, but the excise tax should payable at a price specified in Article 71, paragraph 1, item 1 of the PPZADS in connection with Article 29, paragraph 3, item 5 of the ZADS
Test products intended for marketing research
In the consumer goods manufacturing and trading business, it is common practice to carry out various tests on products before they are put on the market or when changes are made. As these are highly regulated products, we believe that even if they do not have a brand name due to their test nature, it is acceptable for them to carry health warnings on the packaging, in addition to being marked with the words "test product, not intended for for sale".
And with regard to determining the excise duty, we propose that it be applied and calculated according to the price determined in Article 71, paragraph 1, item 1 of the PPZADS in connection with Article 29, paragraph 3, item 5 of the ZADS - at the present time BGN 7.50 for 20 pieces, which will subsequently be changed when excise rates are increased/. We offer two options:
- companies to request and receive price tags with a printed price under Article 71, paragraph 1, item 1 of the PPZADS, without a specific product being registered in the public register for the prices of tobacco products.
or
- to allow companies to register a product for test purposes, without indicating the trademark and, accordingly, without the owner of the trademark, with a price according to Article 71, paragraph 1, item 1 of the PPZADS - in most cases, these test products are with white packaging and not marked with a brand.
Banderoli
In order to reduce the administrative burden, we propose that the value of the parcel be included in the excise tax by adding one thousand short cigarettes to the specific rate. Thus, the value of parcels affixed to goods will be paid along with the excise duty, and the value of parcels received but scrapped and returned as unused may be additionally paid every quarter along with the quarterly statements. On the one hand, this will ease the administration of the parcels when requesting and receiving them, as it will not be necessary to be accompanied by a separate payment each time.
Also, a small fraction of parcels are completely lost and destroyed, for which companies pay excise duty. Bearing in mind that excise duty is due for excise goods released for consumption, we believe that an admissible technological marriage can be determined on parcels for which excise duty does not become due. According to good practices from Europe, this technological marriage for tobacco banderoli is about 0.3 – 0.5, existing in 9 member states and other neighboring countries.
Change proposal:
Ch. 25, paragraph 1. Until the excise goods are released for consumption, the licensed warehousekeepers and registered persons do not owe excise duty for:
.....................
Item 5. "0.5% permissible losses of bundles in the form of technological waste from the total amount of spent bundles for tobacco products"
In order to achieve flexibility, reduce the administrative burden for business and the customs administration, as well as for the optimization of the production process, we propose that companies have the possibility to use received labels for a certain tobacco product for the production of another one, provided that:
- the price printed on the package is the same;
- notify the competent customs office in advance.
This will significantly reduce the amount of returned unused parcels, reduce the administrative burden for customs to check and examine returned unused parcels and minimize the destruction of already printed, usable and expensive parcels.
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