Businesses Use Loopholes to Avoid Taxes in Bulgaria - Report

Big corporations manage to avoid paying taxes in Central and Eastern Europe even when rates are as low as they are in Bulgaria, a report by several NGOs in the region has shown.

Bulgaria enjoys one of Europe's lowest individual income and corporate tax rates, a flat 10%.

Indirect taxes thus put the main burden of the companies' activities on the population itself, according to the text titled "Runaway Taxes - Who pays tax in Central and Eastern Europe?"

The report "was inspired by Dimitar Sabev, a tax justice campaigner in Bulgaria, who had already carried our research into this area in 2015." He found that, as of that year, the top 10 companies by revenue in Bulgaria had received a net tax credit.

"In other words as a group, the ten biggest companies in Bulgaria received more from the state in terms of tax rebates and offsets than they put back in."

"Looking at the tax structure of Bulgaria we can see that corporations as a whole pay more than in other countries in our study, and there is a more equal balance between the amount paid by corporations on their income and by individuals. Social Security contributions are also relatively low.

However, the relatively low levels of tax paid by people on their income is made up in other indirect taxes paid by individuals. Compared to other countries in our study Bulgaria collects more in excises, taxes on individual items such as alcohol and tobacco, and on VAT than any other country. These taxes, of course, raise the cost of living and are generally considered to be more regressive than direct taxes."

Dimitar Sabev writes:

"The ten companies with highest turnover for 2015 in Bulgaria paid a combined BGN 44 M (EUR 22.5 M) in corporate taxes. This is a relatively low...