Tax arbitrariness? NRA will be able to raid offices and seize documents

Proposed changes in the Tax and Insurance Procedural Code (TIPC) have provoked strong reactions in the public space and business. In the transitional provisions of the State Budget Law for 2025, submitted by the caretaker cabinet, it is envisaged that the National Revenue Agency /NRA/ will be granted the right to search offices, seize documents and interrogate auditees without judicial authorisation.

The amendment provides for these actions to be carried out by order of the executive director of the NRA during tax inspections and audits. Currently, such actions are possible only in case of refusal of the auditee to cooperate and with the assistance of the Ministry of Interior authorities.

Public figure Danail Koev expressed strong concern on social networks. In a post, he stressed that these powers could turn the NRA into a „brand new bat“ that the state uses against businesses and citizens:

„To concentrate such power in the hands of a single person from the executive branch, who is appointed directly by order, contradicts basic concepts of the separation of powers doctrine. Not to mention that the executive director of the NRA can authorize any single officer to make search and seizure decisions.“

He adds that he doesn’t want to share bad news in the run-up to the holidays, but this is a topic that concerns „the future of the country and what we leave our children”. “We Continue the Change-Democratic Bulgaria” deputy Bozhidar Bojanov also voiced his disagreement with the proposed texts, saying categorically:

„I would not support repressive powers for the NRA. The provision regulates searches and seizures under the Criminal Procedure Code, but at the same time no changes are proposed to the Criminal Procedure Code.“

Bozhanov added that the proposal is written too broadly and gives too broad powers to tax officials.

Entrepreneurs and accountants have reacted strongly to the proposed changes, which they say threaten the country’s business environment. Many fear that it could lead to tax arbitrage and unchecked pressure on companies that are not close to the authorities. Accountants have also expressed serious concerns. They alarm that the verbal interrogations that the NRA will be allowed to conduct create a risk of misunderstanding of the tax matter by the audited persons. Often entrepreneurs use external accountants and lack the necessary training to answer complex accounting and tax questions.

„If the auditee refuses to answer, this will be considered as a refusal to cooperate. Thus, the company will suffer negative consequences without even being able to adequately defend itself,“ said accounting experts.

A further change in the Internal Revenue Code requires businesses to submit a so-called standard audit file to the NRA by the 14th of each month, which includes detailed information on:

– Accounting transactions, accounts and movements;

– Tax rates and taxes charged;

– Customers, suppliers and payments;

– Fixed assets and inventories.

According to the Bulgarian Industrial Association (BIA), this requirement will significantly burden small and medium-sized enterprises:

„The content of the required information will commit huge organisational and financial resources in enterprises and accounting houses. This is an additional cost that many businesses will not be able to bear.“

Accountants warn that the new requirement will lead to documents being copied by hand as each invoice will have to be broken down line by line. This will complicate the accounting process and increase companies’ administrative costs.

The proposed changes to the VAT Code significantly expand the powers of the NRA by allowing searches and seizures without court authorisation and introduce new administrative requirements for businesses. While the aim is to tighten controls against tax fraud, the public and businesses see these measures as a risk of abuse, arbitrariness and excessive bureaucracy. The question of the balance between control and certainty remains open, and the issue has yet to provoke debate in society and in Parliament.

Mayor of Boychinovtsi Svetlin Sreteniev was arrested