Bulgarias international airports will most probably have to transfer the operation of their duty-free shops to other companies.
The need stems from the fact that the airport in the capital Sofia, as well as the ones in Varna and Bourgas, on the Black Sea, do not comply with any of the criteria set in the prepared Duty-Free Trade Bill. Therefore, the airport operators, who do not have the minimum required personal capital of two million leva, could not be licensed after the legal changes take effect.
Sofia Airport has 500 000 leva capital, while the two seaside airports capital is 250 000 leva each.
Three weeks ago, the Cabinet approved its final version of the Duty-Free Trade Bill that now has to be passed by Parliament to enter into force. So far, duty-free trade has lacked an overall legal framework. The major rules have been regulated by the Excise Act and its regulations, as well as by Ordinance Number Eight on duty-free trade issued in 2002.
The bill says that duty-free trade may be carried out only by licensed operators. Legal entities companies with a minimum capital of two million leva, without bad debts and outstanding customs duties will be entitled to be granted a licence.
Immediately after the Government approved the bill, the chiefs of the airports said they had expressed their discontent with the capital requirement. The ministers, however, have not taken into consideration the complaints.
According to Yanko Yankov, executive director of Varna Airport, if the bill is passed by Parliament in its current version, the airport will be forced to give up the operation of its duty-free shops to licensed companies. This would deprive the airport of a significant part of its revenue.
Unofficial data shows that the revenue from duty-free trade currently measures from seven to eight per cent of the total revenue of the seaside airports. For Sofia Airport the share is even bigger.
When discussing the new bill, we told our colleagues from the Finance Ministry that the minimum persona capital requirement could not guarantee the stability of the companies that will be licensed for duty-free trade, Krassimira Stoyanova, head of the legal department of the Transport Ministry, was quoted as saying by the local Bulgarian-language newspaper Sega.
In her view, any company could open a bank account, collect two million leva in it and keep the money there until the licensing procedure is complete, and after that to withdraw the money from the account.
Currently, there are 38 duty-free shops in Bulgaria. Last year, the International Monetary Fund insisted before the Government to take steps to close most of these shops, keeping only the ones at the airports. The reason behind the demand was that after Bulgaria joins the EU, duty-free shops will remain only at the outside borders of the union.
This means that Bulgaria will be allowed to have such shops only at the airports, as well as on its borders with Turkey, Macedonia and Serbia.
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 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.
No such limitation has been envisaged in the new Duty-Free Trade Bill.
