Comments on the analysis of the Ministry of Finance on changes of Article 118 of the VAT Law
On 23.01.2015 the Ministry of Finance published an analysis with the purpose to justify the rapidly adopted, without discussions, changes affecting departmental stations.
The analysis mentions quantities of fuels, total consumption and declared fuels for a three-year period, and emphasizes the difference between them. It does not specify the origin of the data on consumption, what is the period and what is meant by the term "declared".
Most probably, "declared" does not involve the Information System "Fuel control", as it operates from May 01, 2013 or less than 2 years. Based on this data, it is concluded that for 30% of fuel taxes were not paid. This concerns mainly excise duty and VAT. There is an assumption that exactly the sectors Agriculture and Transportation are the largest consumers and they are mainly guilty for "the black market" through departmental stations.
The collection of the excise duty has nothing to do with gas stations, no matter depatmental or not. Fuel, and any other excise goods, are released for consumption by the so-called tax warehouses, places where the goods may be stored under suspension of excise duty and which places are under constant and strict control of the Customs Agency. They have an online connection with the Agency and the movement of goods is registered or at least it should be registered.
When producing excise goods in the country or delivering them from abroad, they must be directed to a tax warehouse and pass through it. When directing the goods towards the internal market excise duty is charged and should be paid to the state. The assumption that departmental stations sell fuel without excise duty means that they have found it somewhere and that a tax warehouse has not fulfilled its obligations. The total number of tax fuel depots in Bulgaria is several tens. It is not logical to expect that the state will be able to control efficiently tens of thousands of departmental stations when it is obvious that the control on a fewer tax warehouses is not satisfactory.
In the analysis it is stated that more than 700 stations in small towns are closed due to "unfair competition of departmental stations." Actually, departmental stations exist for a very long time and mass closure of small stations happened in 2012 when petrol stations were obliged to be equipped with level indicators - a measure which is very similar to the current one. Then it was impossible for small petrol stations to invest the necessary resources and they just stopped working. That caused damage to the competition.
On one hand, it is alleged there is no information about the capacity of reservoirs in departmental stations, and on the other that they are large and exceed these petrol stations (retail). It is suggested that wagons - tanks sold by the Bulgarian State Railways are used only for tanks of departmental stations.
The presented cost values, needed for the equipment required by the Law, are rather low and incomplete. For example, a fuel tank of an approved type may cost between 2000 and 5000 leva only if it is recycled or reused.
All of this shows that the analysis of the Ministry of Finance gives only one point of view with the aim to justify the regulations which were adopted without the proper discussions.
Stoil Arnaudkin, CEO