20 years together

August 2013

31 August 2013

Act for Amendment and Supplement to the Corporate Income Tax Act (AASCITA)

The AASCITA was promulgated in State Gazette, issue 68 of August 2, 2013.

The main amendments, introduced in the Corporate Income Tax Act (CITA), concern the regulation of the fiscal stimulus in providing scholarships.

A new Art. 177a is created. According to this provision, the accounting expenses for an established and provided student scholarships are recognized for tax purposes. The respective student is required to have not less than 12 and not more than 24 months until acquiring secondary education degree. This provision also applies for students in a school, situated in a European Union member-state or another state - party to the European Economic Area Agreement. The following conditions have to be fulfilled at the time of the provision of the scholarship:

1. the scholarship holder has to be a student in the last two grades of his/her secondary education or a student in the last two years of his/her "bachelor" or "master" degree and has to be under 25 years of age;

2. the profession of the scholarship holder  has to be in the field of activity of the taxpayer;
 
3. with the contract for provision of a scholarship the taxpayer should undertake to employ the scholarship holder for a period not less than the total amount of months for which the scholarship is granted.

The taxpayer is allowed to establish and to provide a scholarship in this manner for one or more students.

In case the taxpayer does not employ the scholarship holder until the end of the calendar year that follows the year of his/her graduation, the accounting financial result has to be increased with the amount of the provided scholarship, when calculating the tax financial result for the year of occurrence of this circumstance.

If the taxpayer employs the scholarship holder for а part of the period under Art. 177a, Para. 1, Item 3, the accounting financial result has to be increased with the part of the provided scholarship that is proportional to the unfulfilled obligation under Art. 177a, Para. 1, Item 3, when calculating the tax financial result for the year of the termination of the legal relation.

In case the scholarship holder refuses to start work until the end of the calendar year that follows the year of his/her graduation, when calculating the tax financial result for the year of occurrence of this circumstance, the accounting financial result has to be increased by:

- the whole amount of the provided scholarship in case compensation is not agreed upon in favor of the taxpayer that provides it or
- by the difference between the provided scholarship and the arranged compensation agreed upon, if the amount of the compensation is less than the amount of the scholarship.

A new Art. 177б is created. This provision excludes the application of Art. 177 of CITA regarding fiscal stimulus for hiring unemployed persons as employees under a labor contract, to which Art. 177a is applied.

The tax relief under Art. 177a is applied after a statement for compliance with the rules on state aid is made by the European Commission. The amendments enter into force on January 1, 2014.

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Act for Amendment and Supplement to the Employment Promotion Act (AASEPA)


The AASEPA was promulgated in State Gazette, issue 70 of August 9, 2013.

The main amendments, introduced in the Employment Promotion Act (EPA), concern the allocation and spending of funds for employment promotion and for regulation of a single permit for work and residence for foreigners.

In Art. 7 a new Paragraph 3 is created. According to this provision for the implementation of the state employment policy, the Minister of Labour and Social Policy, the Minister of Education and the Executive Director of the Employment Agency shall exchange information. This exchange has to be done under terms and conditions determined by an agreement between the Minister of Labour and Social Policy and the Minister of Education and Science.

Amendments are also made in Art. 16, Item 15 which regulates the allocation and spending of funds for active employment policy regarding costs under orders and contracts concerning procedures of direct provision of grants under Priority Axis 1 “Promotion of economic activity and development of the labor market, that encourages the inclusion” and under Priority Axis 2 “Increasing the productivity and adaptability” of the Operational Program “Human Resources Development”. It is required that the Managing Authority shall verify these costs which shall be paid and eligible under EPA.

A new Art. 16a is created. According to this provision the allocation of funds for promotion of employment under the EPA is realized in the form of de minimis aid schemes. The regulations in this part are harmonized with the provisions of Regulation (EC) № 1998/2006 of the Commission from December 15, 2006 for the application of Art. 87 and 88 of the Treaty to de minimis aid and with the regulations amending, supplementing or replacing it. Para. 2 assigns functions to aid administrator under Para. 1 to the Employment Agency. The terms and conditions for granting such funds are determined by the Rules for application of EPA.

Art. 30a, Para. 1, Item 9 is amended with regard to the costs, which are provided for the implementation of programs and measures for employment promotion: after the amendment persons involved in motivational training will receive not only transportation and accommodation costs, but also scholarships.

New Art. 36a and Art. 36b are created. According to these rules for each job position opened, on which an unemployed person under 29 years of age is appointed, the employer will be provided with the funds for implementing the programs and measures to promote employment for the period during which the person has been employed. Depending on criteria such as registration in the Employment Agency, work time and education, these amounts are paid for up to 12 months or between 6 and 18 months. The payment rate is differentiated by 6-month periods. A similar rule is created in Art. 41a for the apprenticeship of an unemployed person under 29 years of age. The figure of a mentor is also introduced – a person working in the same enterprise who trains the employed apprentice during the work process in the respective profession or trade, whereas this mentor has qualification, certified by a document, and at least three years of work experience in the same profession or trade.

Art. 56 is amended, more specifically in 7 items the conditions preventing the employers and institutions that provide  education to adults or vocational guidance, from receiving funding under the EPA are systemized (participation in the production or processing of agricultural products, activities in the sectors of coal, fisheries and aquaculture, presence of required public obligations or liabilities to projects under the Operational Program “Human Resources Development” or if the enterprise is in difficulty).

Art. 56, Para. 5 provides that subsidies for opening of job positions for youth employment and under programs and measures for transition from passive to active measures, are given if during the last three months the employer has not released employees hired on the same job positions on which unemployed people are hired.

In Section “Employment of Bulgarian citizens abroad” in Art 68, Para 2, 3 and 4 are created. The amendments provide for cooperation between the Ministry of Labour and Social Policy and the competent public authorities of other Member States. For information exchange with them a network of agencies for labor and social issues in the respective representative offices outside the Republic of Bulgaria shall be created.

A new Art. 72б is created. According to this provision the work permit under Art. 70 EPA is not issued as a separate document, but is a part of the single permit for work and residence for foreigners – citizens of third countries, issued by the Ministry of the Interior pursuant to Art. 24i of the Foreigners in the Republic of Bulgaria Act.

The additional provisions provide legal definitions of the terms “worker – foreigner from a third country”, “single permit for work and residence”, “single application procedure” and “enterprise in difficulty”.

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