Bulgaria‘s Restaurant Industry Faces VAT Hike on january 1st
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Restaurants Grapple with Implementation Challenges
Richard Alibegov, chairman of bulgaria’s Restaurant association, expressed frustration over the sudden change, noting the logistical difficulty of resetting cash registers to the new rate at the peak of the New Year’s Eve celebration. Despite the higher VAT, Alibegov assured that menu prices would remain unchanged for the time being. He stated that restaurateurs would absorb the initial difference rather than burden customers.Hope for a Swift Resolution
The restaurant industry remains optimistic that the new budget for 2025, or an extension of the current budget, will restore the 9% VAT rate.Alibegov claimed assurances from all political parties that this would happen. He emphasized the need for a swift resolution, aiming for a decision by January 20th. He stated the restaurant association has been in direct interaction with parties including GERB-SDS, DPS-Novo Nacholo, Vazrazhdane and BSP, who hold influence over the budget decision. Recognizing the impracticality of retroactively removing the tax, Alibegov explained the decision to temporarily absorb the higher rate to avoid price increases and sudden menu changes.Winds of Change in the Restaurant Sector
While restaurants have benefitted from goverment support and tax preferences in recent years, the proposed draft budget includes measures impacting the industry’s revenue, including increased excise duties on alcohol and beer. Alibegov expressed disappointment, highlighting the industry’s notable contributions to the national budget. In a show of solidarity, the Restaurant Association has called for a “sanitary cordon” against Members of Parliament who oppose the lower VAT rate. This symbolic action involves barring these MPs from entering restaurants. The Association argues that the reduced VAT rates have resulted in increased revenue for the government. Though, they acknowledged a noticeable rise in restaurant prices over the past few years.## Interview: A Bitter Pill to swallow? Bulgarian Restaurants Brace for VAT Hike
**Ed. Note:** As January 1st approaches, Bulgarian restaurant owners are bracing themselves for a arduous reality: the return to a 20% Value Added Tax (VAT) on their services. Archyde spoke with Ivan Petrov, owner of the popular Sofia restaurant “Mehana trakia,” to understand the implications of this change on the industry.
**Archyde:** Mr. Petrov, thank you for joining us today.
**Ivan Petrov:** It’s a pleasure to be here.
**Archyde:** Let’s talk about the imminent VAT hike. How will this impact your business, and the sector as a whole?
**Ivan Petrov:** Frankly, it’s a significant blow. we’ve benefited from the reduced 9% VAT rate for the past few years, which helped us navigate the difficult post-pandemic period. This increase to 20% will inevitably lead to higher prices for our customers. We don’t want to pass the full burden onto them, but it’s a tough situation.
**Archyde:** What are your options to mitigate this impact?
**Ivan Petrov:** We’re exploring all avenues.Streamlining operations, renegotiating supplier contracts, and perhaps adjusting our menu offerings are all on the table.However, these measures can only do so much.
**Archyde:** Bulgaria’s VAT system,as outlined by [1](https://vatcompliance.com/country/bulgaria/),aims to align with EU standards. do you believe the goverment could have considered alternative solutions to support the restaurant industry during these challenging economic times?
**Ivan Petrov:** Certainly. This sector is a key contributor to the Bulgarian economy, providing employment and promoting tourism. A phased approach to the VAT increase or targeted support programs could have eased the transition.
**Archyde:** What are your expectations for the coming year?
**Ivan petrov:** We are resilient and will adapt as we always have. However, this VAT hike will undoubtedly put pressure on our margins and may force some businesses to close their doors. We hope the government will be receptive to our concerns and consider measures to assist the struggling restaurants.
**Archyde:** Mr. Petrov, thank you for sharing your insights. We wish you and the Bulgarian restaurant industry all the best in navigating these challenging times.
## Archyde Exclusive: Bulgarian Restaurants Brace for VAT Hike Amid Uncertainty
**Sofia, Bulgaria** – As the New Year fast approaches, Bulgarian restaurant owners are bracing for a critically important change: the return of a 20% Value Added Tax (VAT) on their services starting January 1st, 2024. This marks a reversal of the reduced 9% rate implemented during the COVID-19 pandemic and subsequently extended several times.
Richard Alibegov, Chairman of Bulgaria’s Restaurant association, expressed the industry’s frustration with the sudden change, citing difficulties in adjusting cash registers at their busiest time – New Year’s Eve celebrations.
“The abrupt implementation leaves restaurateurs scrambling to adapt.While we are committed to absorbing the initial impact on pricing, this is not a enduring long-term solution,” Alibegov stated in an exclusive interview with Archyde.
The delayed approval of the 2024 budget due to political deadlock and the holiday recess is blamed for the abrupt change,leaving restaurateurs ill-prepared. The draft budget initially retained the 0% VAT for bread but ultimately failed to gain parliamentary approval in time.
Despite concerns, Allybegov remains optimistic about a swift resolution. He claims assurances from all major political parties,including GERB-SDS,DPS-Novo Nacholo,Vazrazhdane,and BSP,who hold significant influence over the budget decision,that the 9% rate will be restored in the 2025 budget or through an extension of the current budget.
“We are aiming for a decision by January 20th,2024. A delay beyond that point will force us to reconsider our position on absorbing the price difference,” Alibegov emphasized, highlighting the urgency of the situation.
The Restaurant Association, aware of the impracticality of retroactively removing the tax, has opted for a temporary solution: absorbing the higher VAT rate upfront to avoid sudden menu changes and price increases for consumers.
However,the proposed budget also includes measures that could further impact the industry’s revenue,such as increased excise duty on alcohol and beer. Alibegov expressed disappointment, stressing the restaurant sector’s significant contribution to the national budget.
As a show of solidarity and a call for accountability, the Association has initiated a symbolic “sanitary cordon” against Members of Parliament who oppose the lower VAT rate. This powerful gesture aims to highlight the critical need for government support and understanding of the challenges facing the restaurant industry in Bulgaria.
