Advantages and Disadvantages of the Common Tax Bank Account

The introduction of a common tax bank account in Bulgaria on 01/01/2013 undoubtedly represents a remarkable new feature in the national budget payments administration – a measure long anticipated not only by accountants and businessmen, but also by ordinary people. This step was taken in an effort to facilitate the rather complicated and clumsy bureaucratic procedures in the local tax administration – frequently held accountable for the insufficient effectiveness of foreign investments attraction as well as for the inadequate unprofessional approach towards the local business and ordinary people.

But what was actually changed in the last approximately three and a half months?

Did the common tax account really enhance the business environment making the payment services a more pleasant and easier procedure?

If a one-word answer to the last question should be given, it would definitely be more “YES” than “NO”.

But let’s make a quick and concise analysis of the already apparent to the specialists (and practically visible) advantages and disadvantages of this new feature:

Advantages:

• Reduction of the financial burden in terms of bank taxes and fees.

Through the new account it is now actually possible to execute the payment with only one payment order without the need for filling in several ones to several different bank accounts. Each payment order used to bring along a transaction fee which on many occasions turned into an additional burden to both businessmen and ordinary people.

• Reduction of bureaucratic procedures in terms of payment documentation requirements.

Thanks to the new bank account it is no longer needed to fill in several payment orders describing the payment considerations as well as the payment period. This definitely represents serious simplification of the entire procedure.

• Reduction of the payment transaction time.

That is probably one of the most important advantages in relation to the administrative reforms which are so vigorously debated. After all – that is the goal behind all these actions – to stimulate every individual society member to adhere to the relevant procedures through the introduction of different types of simplification and a high level of clarity and promptness of all processes involved.

Disadvantages:

• Impossibility related to payment differentiation.

What the government provided as their advantage, but in many cases could be also considered disadvantage for the tax payer, is the automatic payment execution in “time” reference rather than “destination” one. Practically, this stands for the impossibility of paying off a more recent liability and leaving once again an older one not repaid. This guarantees chronological payment execution, but to some extent represents an obstacle and disadvantage (for the tax payer) in relation to the functionality of the common bank account.

• Possible payment misunderstanding and delay.

The practice suggests that the common tax bank account payments do not invariably go smoothly since some misunderstanding and delays are within the realms of possibility. The latter, of course, get almost immediately handled, but, nonetheless, could be regarded as a temporary disadvantage.

• Different IBAN bank account numbers for different Tax territorial division units.

Despite being common for national budget payments, the tax bank account requires payment with a different IBAN number to different territorial tax units. This could once again cause slight dissatisfaction especially with ordinary people who don’t possess the bank knowledge needed for certain bank documents preparation.

The concise analysis definitely proves that the advantages of the common tax bank account are much more considerable than its possible disadvantages. It is no wonder most specialists agree that the positive effect of the introduction and active use of this new feature is yet to be revealed. This is equally valid for the Bulgaria’s business and investment environment formation as even more attractive to outside entrepreneurs. And along with other planned reforms Bulgaria is likely to stay on the right track – the way to the positive business image preservation and providing even more attractive financial and economic opportunities for future development.

April 21st, 2013 Posted by RPNAdmin Filed in: Other