The Bulgarian Industrial Association (BIA) starts series of legal actions against the unlawful determination of the rates of state fees. The initiative is a part of the consecutive policy of the BIA against administrative burden on Bulgaria’s business. A solid proof of this burden is the fact that in 2016 the total fee income in the national budget has risen with more than 11% and in the budget for 2017 a new growth of 7,6% is planned. The income of fees as a prat of Bulgaria’s budget is 4,5% and in Slovenia, for example, is only 0,2%.
This leads to the conclusion that fees are turning into quasi-taxes, which lowers the positive effect of the low level of corporate taxation. This way the wildly proclaimed advantage of our country as an investment destination with a low tax burden stays only written but doesn’t have a real effect. Just the contrary, the existing and future investors are daily running into obligatory payment of taxes which are far higher than the expenses made for the corresponding administrative service.
The lack of audibility from the executive and legislative authorities about the need of reduction of administrative burden on business is the main reason for the BIA to seek justice in court.
The first complaint from the BIA was lodged on November 2nd 2016 through the Council of Ministers in the Supreme Administrative Court. It concerns the Tariff of national fees, collected by the Registry Agency. By this complaint it is insisted for Art. 2, para 1 of the Tariff in its part, which determinates the fee of 0,1% of the price on which the act or document has been taxed, to be abrogated. The main arguments of the BIA for this request are:
- The Constitution principle for consideration of citizens’ property by the collection of fees (Art. 60, para 1 of the Constitution) is infringed;
When practicing their activities, dealers and companies need credits for investment in up-to-date technology and equipment. The number of natural and legal entities which use bank credits for business purposes is constantly increasing mainly through mortgages of immovable property. Credits, however, are not a form of income or property, which can be a base for fee determination.
- The guaranteed by the Constitution protection of citizens' rights in court is restricted;
The law allows exemptions from court fees and expenses for certain categories of natural or legal persons when they are litigants. The exemption from court fees is inadmissible when the statement of claim is a subject of entry. In some cases this could obstruct the initiation of proceedings, which prevents access to justice.
- The Law for State Charges, which proclaims cost-orientated approach by fees’ determination, is violated.
The Law for State Charges requires economic logic and validity of fees – they have to correspond to the technical and administrative costs made when providing such services. Registry fees repeatedly outweigh the costs for service provision and are not compatible with the powers and responsibilities of the notary register. The following is stated in BIA’s complaint: “Paradoxically, the notary, who carries out all activities in deal shaping works for fees with a determined upper limit but the maximum amount is not determined for the notary register despite the limited scope of his activities. In some cases this could lead to registry fees, which exceed the notary fees for the same act.”
The lack of relation between the expenditures of the Registry Agency for provision of services and the Agency’s income, which comes from providing those services, is easy to be seen in their annual financial statements. The annual financial statement of the Registry Agency for 2015 shows income from services of BGN 54 million and administrative expenses of BGN 16 million. Those fees turn the Registry Agency into a revenue agency, managed with budgetary means, which takes it away from its purpose of delivering services to citizens and business.
The Tariff of national fees, collected by the Registry Agency is a subordinate legislation act with an unlimited number of addressees and affects the interests of the BIA and its member organizations. This justifies the interest of the BIA for filing a complaint.