Bulgaria’s National Assembly is considering a draft bill submitted on 18 May 2026 to introduce a 0% VAT rate on “socially beneficial and essential foods and drinks” listed in the National Statistical Institute “small consumer basket”, aiming to ease inflation pressures and reduce the tax burden on low-income households.
Bulgaria’s National Assembly is reviewing a draft bill submitted on 18 May 2026 that proposes introducing a 0% VAT rate on “socially beneficial and essential foods and drinks” under the Value Added Tax (VAT) Act.
The proposed measure would apply to products included in the National Statistical Institute (NSI) “small consumer basket” used for CPI as of 1 January 2026. These items cover basic goods such as bread, dairy products, and essential meats and poultry. The initiative is intended to reduce the tax burden on low-income households and lower final consumer prices by cutting VAT from the standard 20% to 0%.
Lawmakers cite inflationary pressures linked to Bulgaria’s adoption of the euro and external factors, including geopolitical conflicts, as key reasons for the proposal.
The bill also highlights wider socio-economic concerns, noting high levels of income inequality and significant poverty risk, with food accounting for up to 40% of household income for vulnerable groups.
Although the zero-rate would reduce VAT revenue from food, the proposal argues this loss could be offset by increased VAT receipts from fuels, which have recently seen strong growth. It further states that the measure would not increase the administrative burden on businesses or individuals.
If adopted, the legislation is expected to enter into force alongside the 2026 State Budget of the Republic of Bulgaria. The Ministry of Finance and the Ministry of Agriculture would then have two months to issue implementing regulations and define product specifications to prevent tax evasion or misuse. The draft bill was submitted by Members of Parliament Dimo Georgiev Drenchev and Petar Nikolaev Petrov.
