Tax

A new legal provision outlining set dates for submitting tax declarations puts an end to the annual farce of constantly shifting deadlines. The custom of giving extension upon extension cultivated a climate of inconsistency and the wrong mentality.

The Energy Ministry is reportedly considering a scenario of imposing a special tax on the revenues of RES projects that were connected to the grid before 2021 as a key measure for zeroing out the deficit of the RES support account projected to reach 257 million euros by year-end.

The government’s economic team is exploring potential changes to incentives aimed at encouraging taxpayers to shift from cash transactions to electronic payments.

Sweeping checks and cross-checks are being launched by the Inland Revenue, which is targeting, among other things, tuition fees paid to private schools to confirm whether they are declared as living expenses.

The large increase in revenue from income and value-added tax - as the electronic tools for curbing tax evasion are paying off - provide the government with the leeway to move forward with permanent tax cuts as of 2025.

Prime Minister Kyriakos Mitsotakis reiterated his government's commitment to "gradual, fiscally sustainable tax cuts," enabled by increased state revenue from economic growth, GDP gains, debt reduction and a crackdown on tax evasion.

“Gradual, yet fiscally sustainable tax reductions remain our central choice,” emphasized Prime Minister Kyriakos Mitsotakis in his weekly review published on Facebook.

According to Mr. Mitsotakis, tax reductions are made possible due to increased state revenues and the reduction of debt, as well as the decrease in tax evasion.

According to Eurostat data, Bulgaria's tax-to-GDP ratio is among the lowest in the European Union. In 2023, the overall tax-to-GDP ratio for the EU, which includes the sum of taxes and net social contributions as a percentage of gross domestic product (GDP), was recorded at 40.0%. This figure represents a decrease from 40.7% in 2022.

The political establishment had at first appeared allergic to the idea of an independent agency tasked with detecting tax evasion and collecting public revenue. 

The government is launching a new round of tax cuts with a focus on direct income taxes. The signal was set by the prime minister and the minister of the national economy at the inauguration of the new AADE facilities, stressing that tax revenues will allow for new tax cuts.