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Local Taxes In Sofia May Prove Illegal

Local taxes in Sofia for this year might turn out to be unlawful because the Sofia municipal council has failed to observe the deadline, February 29, for announcing the new rates, Dnevnik daily reported on March 4.

Collection of local taxes should have started on March 4, but the new rates haven't been published anywhere. The councilors said that they “have stopped the clock” and will continue work on the taxes and the Sofia budget at the council's next session on March 6. “Stopping the clock” is practice is used in Parliament, but only to extend its sessions within the range of one day.

Delaying by one week was too much, lawyers quoted by Dnevnik daily said, and because the councilors have missed the deadline, tax rates should remain the same. A decision by Bulgaria's Constitutional Court binds all institutions that impose taxes to observe deadlines strictly, so residents are aware of the amount of their taxes.

Failing to publish the ordinance on local taxes by the deadline will result in chaos on the property market, Dnevnik daily claimed. Statistics show about 700 property deals are signed every day. The local tax on property transactions was two per cent of its value, but the Sofia councilors intended to raise the tax to 2.5 per cent. The amount of tax that has to be paid on property deals in "the week of the stopped clock" remains unclear.
Another local tax rate that will be hiked is the one levied on vehicles, with the tax on cars that are five to 10 years old rising by 30 per cent, and a 60 per cent increase on vehicles older than 10 years.

Should Sofia's new local taxes prove illegal, the capital's budget will suffer losses amounting to several million leva.