Parliamentary Committee Rejects VAT Amendments on Bread, Flour, and Medication

The Parliamentary Committee on Budget and Finance has rejected proposed amendments to the VAT Act, submitted by BSP - United Left Co-Floor Leader Atanas Zapryanov and other MPs, which aimed to maintain a 0% VAT rate on bread and flour until the end of 2025. The proposal garnered 9 votes in favor, with no opposition but 11 abstentions, CE Report quotes BTA

As of January 2025, the VAT rate for bread and flour reverted to 20%, ending the 0% rate introduced in July 2022 during the COVID-19 pandemic. Lawmakers behind the proposal warned that this increase could result in a 20-23% price hike, compounded by rising production costs linked to a higher minimum wage and increased energy prices.

Finance Minister Lyudmila Petkova argued that maintaining a zero VAT rate would reduce state revenue by approximately BGN 97 million. Similarly, Plamen Dimitrov, President of the Confederation of Independent Trade Unions in Bulgaria (CITUB), noted that the zero VAT had only briefly reduced bread prices by 5-6% and only for certain types.

Another amendment, proposing a reduced 9% VAT rate on medications covered by the National Health Insurance Fund, was also rejected, with 10 votes in favor and 10 abstentions. While supporters claimed it would lower Bulgaria’s high medical product costs, Petkova warned it could result in BGN 122 million less revenue for the state budget.