Bulgaria published the law on amendments to its Corporate Income Tax Act in its official state gazette. The amendments were adopted by the 44th National Assembly on November 21, 2019.
Bulgaria implements the EU Anti-Tax Avoidance Directive 2016/1164 (ATAD1) and 2017/952 (ATAD2). The ATAD is part of the Anti-Tax Avoidance Package adopted by the EU in response to the OECD BEPS Action Plan. The ATAD’s intention is to have a minimum level of harmonised rules in the fields of CFCs (Controlled Foreign Corporations), hybrid mismatches and interest deductions. It requires the introduction of a corporate general anti-abuse rule (GAAR) and an exit tax.
By implementing the ATAD, Bulgaria will, among others, apply new rules for hybrid mismatches. These new measures will prevent companies to achieve double non-taxation by exploiting differences between tax systems. In addition, Bulgaria implements the exit tax measures of the ATAD. This means that in the situation when an entity transfers residence, activities or assets out of the country the deemed gain that arises from that will be subject to exit tax.
The law will enter into force on January 1, 2020, with the exception of certain items of the additional provisions of the Value Added Tax Act, which will enter into force three days after the announcement of the law in the official state gazette.