What are the latest changes to the Tax Code? What’s new in the tax laws for 2025? How to prepare for tax audits after the new changes?
Latest Changes to the Tax Code
In recent years, the Bulgarian Tax Code has undergone several significant changes. These changes reflect both European requirements and internal needs for improving the tax system. Some of the key changes in recent months include greater transparency in tax reporting. This includes new regulations for clearer tax obligations for large companies and the public sector. These changes aim to reduce the risk of tax evasion and improve tax collection.
The government has introduced tax relief for small and medium-sized enterprises (SMEs), offering easier VAT registration and simplifying the filing procedures for tax declarations and reporting. In addition, an important part of the new legislation is taxation of digital assets and cryptocurrencies. The government will implement specific rules for the taxation of cryptocurrencies and other digital assets in 2024, and will continue to refine them with new provisions in 2025.
There are also tax incentives for innovation and R&D, encouraging companies to invest in research and development (R&D), as part of efforts to advance technological growth in the country. Furthermore, changes include stricter penalties for non-compliance with tax obligations and greater opportunities for tax audits using modern technology to track tax liabilities.
What’s New in Tax Laws for 2025?
Several important changes are expected in the tax laws for 2025, affecting both the corporate sector and individuals. Some of the main changes include new tax rates for small businesses. The government will introduce new lower tax rates for companies with annual revenue below a certain threshold (e.g., 1 million BGN), reducing the tax burden and encouraging entrepreneurship. These companies will also be able to file simplified tax declarations.
The government is expected to introduce taxation on income from platforms and rental transactions. It will tighten controls on income derived from digital platforms, such as Airbnb. This income will require more detailed reporting and mandatory declaration.
The government may introduce a tax amnesty for old liabilities in 2025. This would allow companies and individuals with outstanding debts to the state budget to pay the principal amount without interest and penalties. Another important change is the extension of the deadline for tax registration of new companies. This will simplify the process of starting a business.
Progressive taxation of income is being discussed. This would mean that people with higher incomes would pay higher taxes. These changes may also include new rates for taxing capital gains. The government will introduce carbon emissions taxes. These taxes will affect industries with significant environmental impact, in line with European ecological standards.
How to Prepare for Tax Audits After the New Changes?
- Increasing Likelihood of Tax Audits – With the new changes to the Tax Code, the likelihood of tax audits is increasing, especially for companies that have not timely implemented the new requirements. Preparing for a tax audit is crucial in order to avoid penalties and additional costs.
- Update Your Tax Reporting – Make sure all declarations are submitted in accordance with the new rules. You should give special attention to the new categories of income, such as income from platforms and cryptocurrencies.
- Conduct Regular Internal Audits – Regular internal audits are essential to ensure that all documents and reports are correct and complete. This will help you avoid unwanted tax penalties, especially if you are a small or medium-sized company.
- Work with Professionals – Working with a tax consultant or lawyer who is familiar with the latest changes in the legislation will help you prepare in the best possible way and avoid discrepancies.
- Keep Documents and Evidence – Additionally, you should keep all documents and evidence of expenses, income, transactions, and payments. If a tax audit occurs, you must provide the necessary information.
- Ensure Proper Electronic Reporting – Make sure to check your electronic reporting, as tax authorities are conducting more audits through electronic systems. Ensure that your data is up-to-date and correctly entered into the tax systems.
- Compliance with Cryptocurrency Rules – If your company is involved in cryptocurrency transactions, ensure compliance with the new rules introduced in 2024 by properly declaring all transactions.
The new changes to the Tax Code, coming into effect in 2025, will have a significant impact. They will affect how companies and individuals make tax payments and submit declarations. Preparing for these changes is key, as well as being aware of new obligations and opportunities for tax relief. With proper organization and consultation with experts, you will be able to handle all the new developments in the tax system.
Staying compliant with tax regulations helps avoid unnecessary fines. Learn more in Tax Audits and Penalties: How to Prepare and Avoid Fines.
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