Bulgaria proposes 10 percent flat income tax
Bulgaria plans to introduce a 10 percent flat tax on personal income in 2008, the government announced Tuesday.
The plan is part of a wider reform agenda which also includes reforms of the social insurance and pension systems.
A 10-percent increase of pensions is scheduled to be introduced in October, for the second time this year, after they were increased by the same rate at the beginning of this month.
“The introduction of the flat tax is expected to generate bigger financial resources for the budget and “bring to light” the incomes,” Prime Minister Sergei Stanishev said.
Currently, the tax rate ranges from 20 to 24 percent, depending on the income.
“The flat tax rate puts an end to tax concessions,” Finance Minister Plamen Oresharski said in an interview for the Trud daily.
“The philosophy of taxation is either charging a high tax rate accompanied by numerous concessions and preferences or a low tax rate without any tax-free minimums or deduction of inherent expenses from the taxable amount,” the finance minister said.
“The flat tax will not have an impact on the income tax revenue in the budget and will not lead to a fiscal loss,” Oresharski said.
Last year, EU newcomer Bulgaria lowered its corporate tax by five points to 10 percent, in a bid to improve the business environment and attract more foreign investment.
The government is scheduled to introduce the tax reform, together with a reform of the welfare system, in parliament by the end of September.
Stanishev said that the proposed reforms would pass smoothly through parliament where his social-liberal coalition government has a comfortable majority.