Will the VAT for Bulgarian Vegetable Producers Drop Out?

Business | August 22, 2019, Thursday // 10:41
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The Ministry of Agriculture is considering introducing a system of VAT reimbursement in the production of fruit, vegetables and milk. This was announced by the Deputy Minister of Agriculture Chavdar Marinov in an interview for Nova TV. The scheme is already being applied to grain producers and the effect is positive, he said.

"The invoice won't have these 20% and the farmers will be able to reinvest the money, for example in seeds, preparations," Marinov said.

According to him, the processing companies also won't pay VAT for the raw material, but only after they have processed and sold it. "This symbiosis unleashes the hands of the processors as well," the deputy minister added.

Marinov said that until they reach the market from the producer, tomatoes and cucumbers pass through 4-5 hands in Bulgaria and double in price. "For the farmer the price is BGN 2 and on the market it is BGN 4," said the Deputy Minister, explaining that unlike neighbouring Greece, where producers unite, the farmers in Bulgaria are small and find it difficult to negotiate with the big chains.

"The degree of organization of farmers in Bulgaria is below 6%, and according to the EU the critical minimum is 20%. In Greece, the cooperation is over 60%, in the Netherlands - 100%," he gave examples.

Another problem with the fruit and vegetable trade, he said, is the too liberal regulation of trading on the markets. A farmer's card releases traders from the obligation to issue receipts. "You can have 10 acres of apples, and you can sell tomatoes and peppers and say, I am a farmer and I am exempt from issuing receipts," Marinov said.

The VAT reverse charge system is one of the anti-fraud measures and is expected to expel phantom companies from the chain.

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