Bulgaria is the only country in the European Union that has introduced a national additional tax – the so-called global tax on large local and multinational corporations of 15% – but has not allowed all the reliefs to be used. This is shown by a study by the Expert Club for Economics and Politics (EKIP) with authors Plamen Donev and Stoyan Panchev.
Substantial Business Exemption
After reviewing the regimes for the introduction of the global tax of 15%, the report finds that Bulgaria is the only EU member that has not fully implemented the exception for substantial economic activity and the exception “de minimis”.
More: KRIB: We are not against the corporate tax, but only in Bulgaria there are no reliefs for businesses
According to the authors of the report, this omission puts the country in a disadvantageous situation in terms of attracting foreign investments and stimulating the leading Bulgarian industrial groups to international expansion.
The level of taxation is a priority factor in attracting significant investment – a fact confirmed by almost complete consensus in academic research and recent statements by Western industry partners. In our country, there is often a misconception that the corporate tax of 10% is a low rate and therefore the problem lies elsewhere. Although the barriers to investment are multifaceted, it should be noted that 54% of the profits of large multinational corporate groups are taxed at an effective tax rate of less than 10%. That is, even a flat tax of 10% is higher than the effective rate that international business pays on over half of its profits.
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Therefore, the authors of the report recommend that the introduction of the full package of reliefs from the global tax of 15% should be a priority task for the legislative and executive authorities in 2024. This will provide new tools and incentives for the realization of significant investments in Bulgaria – which have been lacking in recent years. both according to economists and analysts from the NGO sector, and already according to the governing bodies of leading international western chambers of commerce in our country.
Changes in ZKPO
The report recommends changes in three articles of the ZKPO, which would introduce the full package of reliefs and make Bulgaria once again on an equal footing and even with tax advantages in attracting multinational investments. The latter is particularly important in view of the processes of outflow of international investments from Europe to the USA and China, and the stagflation in the EU and the Eurozone, which can only be overcome by more investments in the production of goods and services.
