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CHANGES TO THE TAX PROCEDURE CODE

(IN FORCE AS OF 1 JANUARY 2013) 

Changes to the Tax Procedure Code were published in State Gazettes # 82/26.10.2012 и # 94/30.11.2012, the most of essential of which come into force on 01.01.2013.

Some of the most important changes to Tax Procedure Code have been briefly summarized below.

1. Changes to the sequence of payment of public liabilities

The sequence of payment of public liabilities, where a taxable person has several liabilities, which cannot be paid simultaneously, has been changed. In such case, liabilities having earlier due date shall be paid first. If a person has several liabilities with the same due date, they shall be paid pro-rata. Up until now, the persons had the right to choose which of the liabilities to pay.

The changes are made in relation to the introduction of the so called “unified payment order”, which shall allow the tax liable persons to pay all they public liabilities by means of one unified payment order only.

The changed sequence of payment of public liabilities triggers the following important consequences:

• As the new sequence shall also be applied in respect of unduly paid amounts as at 31.12.2012, the taxable persons have been given the option to avoid the payment of old liabilities through these amounts by way of claiming them as unduly paid in accordance with article 129 of the Tax Procedure Code. Such a claim, however, should be filed by 01.01.2013.
• The changes to the Corporate Income Tax coming into force on 01.01.2013 have abolished the text in article 94, which allowed overpaid corporate income tax to be offset against next advance or annual corporate income tax installments. This change would also affect the corporate income tax overpaid in 2012 – i.e. such a tax could be claimed for refund but could not be offset from advance installments in 2013.

Apart from the above and in relation to priority payment of tax liabilities with earlier maturity it is possible that the overpaid corporate income tax be used for automatic payment of all kinds of unpaid public liabilities (with the exception of local taxes and fees which are not established by the National Revenue Agency).

• Another adverse consequence from the new sequence of tax liabilities payment could be the risk the payment to be referred to a time barred tax public liability.  In this relation the Tax Procedure Code clarifies that the new sequence of payment shall be applied to tax liabilities whose due date elapsed before 01.01.2008 (and which are time barred on 01.01.2013) after 01.01.2014.  According to information from the public domain during 2013 the taxable persons shall have the opportunity to file time barred related objections under a procedure to be developed.