Bulgaria’s parliament on Wednesday tightened tax rules for company-registered cars and lowered the ceiling for cash payments.

Under draft amendments to the Corporate Income Tax Act adopted on first reading, companies will be able to reimburse only up to 70% of VAT on the purchase price of a vehicle if they use it for personal travel during weekends.

Companies that buy cars priced at more than BGN 5,000 (EUR 2,500) will be required to submit additional statements to the National Revenue Agency to prove they are using the vehicles only for the purposes of their business.

The change aims to prevent the registration to companies of motor vehicles that are not predominantly used for business purposes.

Such a registration allows a complete reimbursement of VAT levied on the purchase price of a vehicle – an option that doesn’t exist for individuals registering a car in their own name.

Another change will cut the maximum amount of cash payments in Bulgaria to BGN 5,000 from BGN 15,000 now.

The changes proposed by the Finance Ministry will become law after a second and final reading. They are planned to take effect from the start of next year.