Bulgaria: National Assembly approves Pillar 2 global minimum tax rules

On 12 December 2023, Bulgaria’s National Assembly declared the approval of amendments to key tax laws, namely the Local Taxes and Fees Act, the Value Added Tax Act and the Corporate Income Tax Act. Notably, significant changes were made to the Corporate Income Tax Act to align with the Pillar 2 global minimum tax outlined in Council Directive (EU) 2022/2523 issued on 14 December 2022. These adjustments involve the incorporation of the Pillar 2 income inclusion rule (IIR) and the under taxed payment/profit rule (UTPR) to establish a minimum tax rate of 15% for multinational enterprise (MNE) groups with annual consolidated revenue exceeding EUR 750 million in at least two of the past four fiscal years.

Furthermore, the amendments introduce a qualified domestic minimum top-up tax (QDMTT), termed as a national additional tax, specifically for members of in-scope groups. The legislation imposes obligations and deadlines for information submission, tax returns, and payments, accompanied by sanctions for non-compliance. These sanctions mirror those in place for failure to fulfill obligations related to Country-by-Country (CbC) reporting and transfer pricing documentation requirements.

The IIR and QDMTT provisions become effective from 1 January 2024, while the UTPR will be applicable from 1 January 2025.

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