Transporting goods with high fiscal risk - what do you need to know?

If you are a retailer or wholesaler and are involved in the transport of goods subject to special fiscal controls, you need to know what your obligations and rights are in relation to the tax authorities. In this article, we will introduce you to the main provisions of the Foreign Source Income Tax Act (FSTIA) and its Implementing Regulations (IRIR) that govern the carriage of goods with high fiscal risk. We'll explain what high fiscal risk goods are, how to legally transport them and what penalties you face if you don't. We will also give you some useful tips on how to avoid problems when transporting such goods.

REGULATION No H-5 of 29 September 2023. on the conditions and procedure for exercising fiscal control over the movement of goods with high fiscal risk on the territory of the Republic of Bulgaria

What are high fiscal risk goods?

According to the HIPC Act, high fiscal risk goods are those that have a high potential for tax evasion or other illegal activities such as smuggling, fraud or terrorism. These are goods that:

- have a high value or are easily converted into money;

- have a low weight characteristic or are easily hidden;

- have a large volume or are difficult to identify;

- subject to excise duty or special tax regimes;

- are part of the list of goods with high fiscal risk set by the Council of Ministers.

Examples of such goods are: gold, precious stones and metals, banknotes and coins, cigarettes, alcohol, fuels, electronics, cosmetics, perfumes, textiles, shoes, toys, etc.

List of high fiscal risk goods

What should you do if you are transporting high fiscal risk goods?

If you are transporting goods with a high fiscal risk, you must comply with the following requirements:

- Have a valid registration as a person under the HIPAA and use a unique identification number (UIN) for all your activities;

- Issue invoices for all sales of high fiscal risk items and record them in an electronic sales ledger (ESL);

- Provide data on the shipment of high fiscal risk goods to the National Revenue Agency (NRA) via the Electronic System for Exchange of Information (ESOI);

- Carry documentation for the shipment of goods with high fiscal risk, which you must present upon request of the NRA or Ministry of Interior (MoI);

- Pay all taxes and fees associated with the shipment of high fiscal risk goods.

The documentation for the shipment of high fiscal risk goods must contain the following information:

- The identity of the carrier and the consignee of the goods;

- The description, quantity and value of the goods;

- The route, origin and destination;

- The delivery period of the goods;

- The number of the invoice or other document certifying the sale of the goods;

- Numbers of the declaration for the carriage of goods with high fiscal risk issued by the ECSC.

The declaration for the carriage of goods with high fiscal risk is an electronic document issued by the ESOI after the carrier has provided the details of the carriage. It has a unique number and a barcode that can be scanned by the NRA or the Ministry of the Interior. The declaration is valid for one shipment and must be issued before the shipment starts.

What are the penalties for non-compliance with the HIPAA and HIPAA?

If you do not comply with the requirements for transporting goods with high fiscal risk, you risk being sanctioned by the NRA or the Ministry of the Interior. Penalties can be:

- Fines from BGN 500 to BGN 10,000 for persons under the HIPAA;

- Fines from BGN 1,000 to BGN 20,000 for persons who are not registered under the RTI Act;

- Confiscation of high fiscal risk goods and the means of transport used to transport them;

- Suspended or unconditional imprisonment for up to five years for serious cases of tax evasion or smuggling.