June 10, 2020 / 10:24 AM / a month ago

Bulgaria cuts taxes for restaurants and catering services

SOFIA (Reuters) - Bulgaria’s parliament on Wednesday approved government plans to cut value added tax (VAT) on food provided by restaurants and catering services to 9% from 20% from July to help an industry hit hard by the coronavirus crisis.

The cut would run through 2021 as a temporary measure to help the sector recover. It would not affect alcoholic drinks bought in restaurants and provided by caterers, which will still attract a 20% VAT rate.

The plan was floated by Prime Minister Boyko Borissov last month despite opposition from his finance minister. It was also criticised by economists who say it would open the door for many more industries to seek tax cuts.

The country sees its economy shrinking by 3% in 2020, while the European Commission expects it to contract by 7.2% this year.

VAT, set at 20% for all goods and services except hotels, is the main revenue source for the country, which keeps income and corporate taxes at 10% - among the lowest in the European Union.

The deputies also voted to cut VAT on books, some baby foods, and diapers to 9% from July until the end of next year.

Reporting by Tsvetelia Tsolova; Editing by Kirsten Donovan

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