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Bulgaria

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Business climate in Bulgaria improved in May 2017

The National Statistical institute says that in In May 2017, the business climate in Bulgaria increased by 3.2 percentage points in comparison with April, due to more optimism in all sectors: surveyed – industry, construction, the retail trade and services.
In the construction sector, the indicator went up by 2.9 percentage points.
However, the NSI noted, the most recent study shows also an increase in the number of clients of the construction sector who had delayed making payments.
About the retail trade, the indicator climbed by 5.6 percentage points, with volume of sales expected to increase both from the domestic and foreign markets over the next three months.
In May, the indicator in the service sector increase by 4.7 percentage points, as managers had more favourable opinions about demand for services.
(Source: IBNA)

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Bulgaria

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Based on the applications for investor certificates, the InvestBulgaria Agency informed about the possible investment of 400 million leva and work for the creation of 6000 new jobs during the 2017.
Such investment should be directed in sectors like information and communication technology, electrical equipment and machinery, textiles and clothing, chemical products, rubber, plastics and other non-metallic mineral products and food products.
Mr Stamen Yanev from InvestBulgaria Agency pointed that there is the need to train a skill labor force that would be needed for the investors who expect highly skilled workers: one of the challenges facing Bulgaria.
From the beginning of 2017 to date, the InvestBulgaria Agency has certified four new projects for an amount of 130 million leva and the potentiality to create 3330 new jobs.
The companies whose projects were given certificates included Integrated Microelectronics Bulgaria, Coca Cola, Lufthansa Technik, and many others.
The laws in Bulgaria entitles the agency to exempt businesses from corporate tax if they invest in areas with high unemployment. In 2016, the agency exempted 19 projects from corporate income tax, while in turn, 83.5 million leva will be invested in such areas.
(Source: B.N.com)

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Bulgaria

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Two years ago the fourth biggest bank in Bulgaria – Corporate Commercial Bank- was closed down and then declared bankrupt. Two billion euro was discovered to be missing from the bank. Many customers lost their money. The task of laying bare the truth and of trying to help collect the credits due was assigned to a specialized British company. The worst prognosis and darkest suspicions were proven true: the owner of the bank, Tsvetan Vassilev, used his own bank as his personal pocketbook.
He sneaked out of the country and has been living abroad for two years, with the Bulgarian authorities making attempt after attempt to have him extradited.
The Bulgarian National Bank now has new management, and the Corporate Commercial Bank no longer exists. There are no financial perturbations in the country either and the banking system should now be running smoothly.

 

 

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Bulgaria: Tax System

According to EU experts, the Bulgarian tax system is relatively good and does not need serious reforms, but the tax collection and the control and reduction of tax frauds should be improved. With regard to VAT the experts recommend to keep a broad base in order to avoid losses for the state budget. Bulgaria is placed 4th in the EU with regard to the share of the money collected from VAT. The collection rate is 70% at present, whereas the average one in the EU amounts to 50%.
Regarding a possible revision of the 10% flat rate on incomes, the experts claim that this is within the priorities of every single country. However, taxes on higher income classes in other EU states are 19% higher than on lower income classes. Some Bulgarian analysts believe that the low tax rate contributed to higher transparency in the national economy and helped attract more investments. while others claim that the progressive tax rate will lift the burden from the poorest people.
The survey conducted by the European Commission shows that the share of the grey economy reaches in Bulgaria nearly 32%, whereas the EU average amounts to 15%. The European experts recommend that Bulgaria should take measures to collect more taxes by monitoring the revenues as well as the expenditures of the tax payers. Electronic payment is another way of reducing the share of grey economy.

 

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Bulgaria: Specialized VAT fraud unit

Alessandro PasutBulgaria’s Deputy Finance Minister has confirmed plans for the formation of a specialized unit within the National Revenue Agency to deal exclusively with value-added tax (VAT) fraud in relation to high risk goods transiting through Bulgaria.
The unit will focus entirely on intra-Community transactions by electronically registering goods imported into, or exported from Bulgaria, or goods placed in customs warehouses bound for other European Union member states.
The unit would in particular look at the trade in known high-risk goods, such as mobile phones, with teams based at five border checkpoints along the nation’s frontiers with Greece and Romania. They would be responsible for checking consignments in vehicles, and tax documentation.
GPS devices are also to be deployed in sealed goods containers allowing for vehicles to be tracked in real time. This would tackle a type of VAT fraud that manipulates EU rules covering zero-rate goods exported to other member states. It would serve to prevent high-value goods, declared as being exported to the European Union, being replaced by lower-value equivalents. Under this type of fraud, the high-value goods, instead of being exported, are sold to the domestic market free from value-added tax.

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Bulgaria: preferencial tax

Act on the Economic and Financial Relations with Companies Registered in Preferential Tax Regime Jurisdictions. The scope of the Act is limited in certain cases, such as shares of a company, in which the company registered in a preferential tax regime jurisdiction or persons related to it participate, are traded on a regulated market in a European Union Member State or a country of the European Economic Area, or other markets, included in the special legislation list, where the actual owners-individuals are disclosed; the company registered in a preferential tax regime jurisdiction is part of an economic group which meets the criteria set out in the Act.

In case an exception to the Act is implemented based on false data, the consequences may be a refusal for the issuance of a license, suspension from participation in the relevant procedure, termination of an agreement, etc. In addition to the above consequences, a fine within the range from BGN 50,000 to BGN 100,000 may be imposed.

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Bulgaria: reporting and declaration of transactions

Reporting and declaration of transactions

The minimum amount of the total receivables from and obligations to foreign persons with regard to commercial loans and other transactions, which are not financial loans that must be declared, is increased from BGN 50,000 to BGN 200,000 or its foreign currency equivalent.

There is an obligation to submit to the BNB statistical forms for quarterly reporting of the operations with foreign persons related to services, remuneration and gratuitous revenues and payments when this has been requested in writing by the Deputy Governor in charge of the Banking Supervision Department or a person authorized by them.

The deadline for submitting the quarterly reports to the BNB has been extended until the 20th day of the month following the reporting quarter (the deadline for the report for the 4th quarter is 25 January), except for the reports related to granting/receiving financial loans where the deadline remains unchanged – until the 15th day of the respective month.

The Ordinance introduces an obligation for annual reporting with statistical forms to the BNB in relation to direct investments in real estate abroad. Reporting on a monthly basis is required in the case of real estate transactions between local and foreign persons.

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Bulgaria: the act on the economic and financial relations with companies registered in preferential tax regime jurisdictions

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The act on the economic and financial relations with companies registered in preferential tax regime jurisdictions, the persons related to them and their beneficial owners entered into force on 1 January 2014. Its main goal is to prevent tax avoidance and not to permit the acquiring of public funds and management of financial resources by companies, which are registered in preferential tax regime jurisdictions.

The Act imposes a prohibition for companies, registered in preferential tax regime jurisdictions, and the persons related to them, to be directly or indirectly involved in certain activities. Following the entry into force of the Act, companies registered in preferential tax regime jurisdictions will no longer be able to be shareholders in companies that carry out licensing activity, to participate in privatization, concession or public procurement, to acquire lands and forests from the state forest funds, etc.

The prohibition is applicable to any person related to the companies registered in preferential tax regime jurisdictions as well, i.e. companies that have direct or indirect control over such legal entities, as well as their subsidiaries.

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Bulgaria: the production and export of clothing and textiles revives

The production and export of clothing and textiles revives. According to the National Statistical Institute and Eurostat, Bulgarian export of clothing and textile marked growth in 2013. Last year export reached 1.8 billion euros – the highest level of Bulgarian exports since 2007. A 7-percent growth in export has been marked in comparison to 2012. Out of those 1.8 billion, export of textiles totaled € 328 million or about 18% of the total exports of the country.

Here is more from the President of the Bulgarian Association of Apparel and Textile Producers, Radina Bankova:
“Export of textiles and clothing is now going through another boom and is close to the strongest years before the crisis. European countries remain our traditional markets. We are glad that a significant recovery of the interest of these countries towards our production has been marked. A great number of major companies have been returning to Bulgaria because of its geographical location, traditionally good relations and technological capabilities of Bulgarian enterprises. Bulgaria’s biggest export market remains Germany, followed by Italy, France, Greece and Spain. Domestic consumption is relatively small. Although in 2013 a 25% rise was marked, it remains below the level of 10 percent of total production.”

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Bulgaria: transactions between local and foreign persons

An ordinance of the Bulgarian National Bank (BNB) on the Balance of Payment Statistics, International Investment Position and Securities Statistics was promulgated in March. It introduces some changes in the regime of reporting and statistical declaration of transactions concluded between local and foreign persons.
A major difference from the previous regime is the need for statistical declaration of each account opened abroad by a local person and not only of accounts opened in relation to financial loans which have been granted.
Operations on, balances and other changes in the amount of a financial loan, received by or granted to a foreign person, should be reported to the BNB using quarterly statistical forms only in the event that at the time of the declaration or as of 31 December of the year preceding the reporting, the amount of the loan is equal to or larger than BGN 500,000 or its foreign currency equivalent.

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