On September 18, 2024, the Bulgarian Ministry of Finance published for public consultation draft legislation to amend the Bulgarian minimum taxation rules. This was submitted to Parliament on December 2, 2024.
The amendments include numerous amendments to the Bulgarian Global Minimum Tax Law to take account of the OECD Administrative Guidance. This includes amendments for:
February 2023 OECD Administrative Guidance (AG1)
July 2023 OECD Administrative Guidance (AG2)
December 2023 OECD Administrative Guidance (AG3)
June 2024 OECD Administrative Guidance (AG4)
An overview of the amendments, the relevant provision in the draft law, and the related Article in the OECD Administrative Guidance is provided in the table below.
Under Article 260z(27)(2) of the GMT Law, where the consolidated financial statements of the UPE are prepared on the basis of eligible accounting standards other than the International Accounting Standard adopted by the EU (in Regulation (EC) No 1606/2002), for QDMTT purposes, the International Accounting Standard ( as adopted by the EU) or National Accounting Standard is used. The December 2024 Draft Law amends the domestic minimum tax provisions and Article 260z(27)(2) has, for example, been deleted. As such the default GloBE rules will apply for determining GloBE income for QDMTT purposes (ie the UPE Accounting Standard unless it’s not reasonably practicable).
| Rule | Provision in the Draft Law | OECD Administrative Guidance Article |
|---|---|---|
| Sovereign wealth funds and the definition of Ultimate Parent Entity | Section 45(132) | AG 1, Article 1.4 |
| Excluded Dividends- Asymmetric treatment of dividends and distributions | Section 14 | AG 1, Article 2.3 |
| Debt release Election | Section 16 | AG 1, Article 2.4 |
| Excess Negative Tax Carry-forward guidance | Section 17 | AG 1, Article 2.7 |
| Equity Gain or loss inclusion election | Section 15 | AG 1, Article 2.9 |
| Allocation of taxes arising under a Blended CFC Tax Regimes | Section 19 | AG 1, Article 2.10 |
| Application of Taxable Distribution Method Election to Insurance Investment Entities | Section 27 | AG 1, Article 3.1 |
| Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity | Section 45 (136) | AG 1, Article 3.2 |
| Simplification for Short-term Portfolio Shareholdings | Section 15 | AG 1, Article 3.5 |
| Marketable Transferable Tax Credits | Section 17 | AG 2, Article 2 |
| UTPR Safe Harbour | Section 12 | AG 2, Article 4.2 |
| Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) | Section 31 | AG 3, Article 1 |
| Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | Section 31 | AG 3, Article 2.3.1 |
| Transitional CbCR – Using different accounting standards | Section 31 | AG 3, Article 2.3.2 |
| Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | Section 31 | AG 3, Article 2.3.3 |
| Transitional CbCR – MNEs not required to file CbC Reports | Section 32 | AG 3, Article 2.3.4 |
| Transitional CbCR – Qualified Financial Statements for PEs | Section 31 | AG 3, Article 2.3.5 |
| Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | Section 31 | AG 3, Article 2.4.2 |
| Transitional CbCR – Treatment of hybrid arbitrage arrangements | Section 31 | AG 3, Article 2.6 |
| Blended CFC Regime amendments | Section 19 | AG 3, Article 4.2.3 |
| June 30, 2026 Filing deadline | Section 49(1) | AG 3, Article 5.3 |
| Amendments to the Switch-Off rule | Section 23 | AG 4 , Article 6.1.4 |
| New definition: Securitization Entity | Section 23 | AG 4 , Article 6.1.4 |
| New definition: Securitization Arrangement | Section 23 | AG 4 , Article 6.1.4 |
For detailed information on the application of the GloBE Rules in Bulgaria, based on the latest 2024 Draft Law, see our:
OECD Administrative Guidance: Domestic Implementation Matrix
Transitional CbCR Safe Harbour: Domestic Implementation Matrix
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