Bulgaria will ban duty-free fuelling of incoming cars and buses and will introduce a limit of 500 litres for trucks under a new Duty-Free Trade Bill
The bill was made public by the Finance Ministry on May 11.
Duty-free shops and filling stations will not be banned, but certain restrictions will be imposed on their business. Car and bus drivers entering Bulgaria will not be allowed to buy duty-free fuel, and truck drivers will be allowed to buy up to 500 litres of such fuel, which, according to estimates, will be more than enough to pass through the country without refilling.
The Finance Ministry believes that if Bulgaria shuts down its duty-free filling stations, the problem of non-excisable fuels will remain because Turkish operators will take up all the business.
Deputy Finance Minister Georgi Kadiev announced this at a May 11 meeting with the parliamentary Committee on Fighting Corruption.
Kadiev also said that according to a report from the operators of 21 filling stations, duty-free filling stations at national borders cause 142 million leva in annual loss to the state.
A Finance Ministry estimate put the annual loss at 95 million leva, he said.
The Finance Ministry is looking for ways to prevent TIR truck drivers who buy fuel at the Bulgarian borders from reselling it to small filling stations inside the country.
There are nine duty-free filling stations in Bulgaria, six of which are located at border crossings: three at Kapitan Andreevo (on the border with Turkey) and three at Kalotina (on the border with Serbia). The other three stations are located in duty-free zones in the cities of Rousse and Vidin (both on the Danube), and in Svilengrad (south-eastern Bulgaria).
Kadiev told the parliamentary committee that the Cabinet was expected within two weeks to approve the final version of the bill. He expects the document to be passed by Parliament by the end of June and to become effective on July 1.
The Finance Ministry proposed that a first offence involving the sale of goods without excise revenue stamps be punished by a six-month suspension of business, and a second offence of the same type should entail permanent closure of business.
The contracts with most duty-free operators in Bulgaria expire between 2009 and 2011. If these contracts are terminated before expiry and without any good reason, large compensations will have to be paid, Kadiev said.
Under the new piece of legislation, duty-free operators should have a real-time online connection to the customs authorities.
The bill introduces value-added tax and excise duty collateral deposit or bank guarantee upon customs clearance of alcohol, tobacco products and liquefied fuels.
Duty-free operators will be levied a four per cent duty-free sales income tax instead of corporate income tax.
The drafting of a new bill on duty-free trade was among the top priorities of the Finance Ministry during the previous governments term of office. Former finance minister Milen Velchev first sparked controversy in 2004 when he proposed shutting down duty-free shops at Bulgarias land-border checkpoints.
At the time, their proposed closure was approved by the Cabinet but was not put to Parliament.
Closure of duty-free shops was presented as part of a package of anti-smuggling measures. Velchev planned to allow the operation of duty-free shops only at international airports and train stations as well as on board international flights and trains, as is standard practice in the European Union.
It seems now that the project of the current Cabinet does not envisage such harsh measures against duty-free operators. However, bowing to pressure from the EU, the Finance Ministry will have to exercise tighter control over the duty-free business.
