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Bulgaria to zero-rate food, heating and water April 2022 in inflation crisis

Temporary tax breaks on domestic fuel and basic foodstuffs

The Bulgarian government has proposed temporarily reducing the Value Added Tax rate on basic foodstuffs, non-alcholoic drinks; medical products heating electricity and gas. The proposal now moves to Parliament, the National Assembly. The measure could come into effect from 1 April 2022.

Inflation hitting new peaks

The National Statistical Institute said that Bulgaria’s consumer prices rose by 7.8% year-on-year in December 2021 following an annual increase of 7.3% in November. The average annual inflation rate in 2021 was 3.3%. The Finance Ministry is expecting an inflation rate of 5% to 6% in 2022

Many other EU states cutting VAT on fuel.

In December 2021, EU finance minister agreed new reduced EU VAT rate setting freedoms which should come into place before April 2022. The European Commission is though open to earlier derogations from the existing VAT Directive restrictions on reduced rates during this temporary energy inflation spike. It has already provided permission to Spain.

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