New reporting obligation for VAT purposes may enter into force in Bulgaria as of 1 June 2023 concerning VAT on uncollected receivables. This obligation will affect all Bulgarian VAT- registered suppliers irrespective of the length of time of non-payment of the consideration to the supply and the reasons underlying the uncollected receivables.
Draft changes in the Implementing Regulation of the VAT Act
According to proposed draft changes in the Implementing regulation of the Bulgarian VAT Act a new monthly reporting obligation concerning bad debts will start to apply to all VAT-registered suppliers. They must report for VAT purposes the status and amount of their uncollected receivables valid by the end of each month. This information should be reported in the VAT return of the supplier every month. Thus, VAT registered suppliers should monthly analyse, update and report the status of their uncollected receivables irrespective of the length and reasons for the delay in payment. Failure to make proper monthly reporting may be interpreted later as a reason to disallow VAT adjustment on any non-reported uncollected receivable.
Also, according to the draft for uncollected receivables below BGN 100k the supplier should consult the client if the client exercised right to VAT credit in order proceed with issue of a proper document for VAT adjustment. Making the VAT adjustment conditional upon collection of information from non-paying client may seriously impact if not jeopardize at all the right to adjustment of VAT on bad debts if the client turns out to be non-cooperative. Most likely the information about the reporting done by the client that is supposed to be available on the website of the tax authorities as of 1 January 2024 would not suffice and substitute failure to collect information from non-cooperative clients about the exercised right to VAT credit on the supplies.
The draft changes are currently undergoing public consultation until 18 April 2023. Unlike the VAT Act the implementing regulations do not require vote by the Bulgarian parliament. In the most part they are supposed to enter into force as of 1 June 2023 after being formally adopted and published in the State Gazette.
Source
