EKIP– Expert Club for Economics and Politics A Different Opinion
Dear readers, as you know from the EKIP, we are strictly monitoring and opposing the attempts of the Ministry of Finance to push through yet another restriction on cash payments by reducing the allowable limit for such transactions to a maximum of BGN 5,000 - a proposal that is part of a bill to supplement the Value Added Tax Act, introduced on September 14, 2017.
After consulting with lawyers, we have determined that this bill is in contradiction with the provisions of European Union law. On the one hand, the Ministry of Finance has not sought the opinion of the European Central Bank, as it is obliged to do under European law when submitting such bills, and on the other hand, it has even ignored the previous recommendations that the ECB has made regarding this case.
In the previous proposal from the beginning of the summer (which envisaged reducing the maximum amount of cash payments from 10,000 leva to 1,000 leva), the ECB was forced to give a negative opinion. The ECB says that there is no evidence that the proposed reduction in the maximum allowable amount of cash payments will achieve the desired goals, namely - reducing the shadow economy. The ECB also believes that the lower threshold for cash payments is unlikely to reduce tax fraud, but will certainly make it more difficult for ordinary citizens.
It is evident that the ECB's position and recommendations regarding the previous such bill are not reflected in the new one at all. The most crucial is the lack of clear evidence for the effectiveness of such measures in limiting the shadow economy - something that we have already highlighted in our first opinion regarding this bill. A serious omission is also the lack of consultation by the government with the ECB regarding the newly proposed reform of this law, which is in direct violation of European law.
Because of all this, we are submitting a second opinion, in which we demand that the Ministry of Finance take measures as soon as possible and correct these shortcomings in its draft law to supplement the Value Added Tax Act before it is discussed in parliament and eventually adopted, which could lead to a violation of the rights of Bulgarian citizens and the initiation of a criminal procedure against Bulgaria by the European Commission.
