(Adds timing of planned tax cuts to be agreed on Wednesday, details)
SOFIA, May 12 (Reuters) - Bulgaria’s ruling coalition plans to cut the value-added tax rate on restaurants to 9% from the current 20%, to help them recover from the coronavirus outbreak, Prime Minister Boyko Borissov said on Tuesday.
Borissov, who initially said the tax cut should take effect next January, agreed with his junior coalition partners to propose the cut this year, despite the objections of his finance minister.
The exact timing for the planned cut, which is pending parliament approval, will be announced on Wednesday.
The Black Sea country, which relies on tourism for about 8% of its economic output, has had 2,004 confirmed cases of the new coronavirus and 93 deaths.
The government has closed all restaurants, bars and cafes since mid-March to contain the infection. It partly eased the restrictions in early May, allowing customers to be served in gardens or on terraces.
“We agreed it should be introduced as of now. We will tell you tomorrow the exact date ...” Borissov told reporters after meeting with the nationalist partners of his centre-right GERB party.
Borissov said the cut is a temporary support measure and is likely to prompt many in the restaurants to exit the grey economy and pay more taxes. The finance ministry, however, has estimated that the budget is likely to lose about 150 million levs in tax revenue, he said.
Hotels already have a 9% value-added tax rate.
Bulgaria, one of the poorest EU members, maintains tight fiscal discipline, but the government expects stringent measures across the globe to halt the spread of the coronavirus will shrink its small, open economy by 3% this year. The European Commission expects the economy to contract by 7.2%.
Borissov has said the government would have enough funds to weather the coronavirus pandemic, but would need billions to restart the economy.
$1 = 1.8005 leva Reporting by Angel Krasimirov and Tsvetelia Tsolova; editing by Larry King