Bulgaria Tackles Cross-Border Tax Evasion

by Lorys Charalambous, Tax-News.com, Cyprus

12 August 2009

Bulgaria’s tax and police authorities will launch an offensive against errant cross-border traders in an attempt to crack down on tax evasion, according to a statement by Finance Minister Simeon Djankov. It is one of a number of measures aimed at tackling tax fraud in the country.

It is estimated that Bulgaria loses BGN2-3bn (USD1.4-2bn) each year to smuggling and tax fraud, with fruit and vegetable importers from neighboring countries thought to be the main culprits. The number of border officials has been doubled along the borders with Greece and Macedonia in a bid to restrict unrecorded goods, with particular attention being paid to the south-western checkpoint of Kulata on the Bulgarian-Greek border, where most of the produce brought in to Bulgaria is imported.

The move is one of a number aimed at increasing the country’s tax take in the face of falling revenues – 17% in the first half of 2010 – which have left a budget gap of BGN2.5bn. Last year, the EU froze aid, including agricultural, to the country because of concerns over the level of fraud there.

However, Bulgaria has made moves to address the problem. The National Revenue Agency (NRA) and the Customs Agency have signed a bilateral cooperation agreement in order to share information to combat tax crimes, while Deputy Executive Director of the NRA, Toshko Todorov, has been appointed to lead three teams specializing in audit and tax compliance in an effort to redouble the fight against tax evasion. The largest vegetable market and other traders in the capital, Sofia, are also to be targeted by tax inspectors, accompanied by police, who will be checking the origin of goods and compiling full inventories on the supply chain.

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