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Bulgaria Keeps Faith In Low Taxes

by Ulrika Lomas, Tax-News.com, Brussels

15 November 2010


The Bulgarian parliament has approved the government's budget plan for 2011, which keeps the main rates of income tax on hold in the interest of maintaining the country's competitiveness. However, the government has decided not to proceed with a planned increase in taxation on luxury homes.

Like other former eastern bloc countries which slashed tax rates in order to attract international investment, Bulgaria is struggling to recover from the global financial and economic crisis, and has run up a substantial budget deficit. However, the government has decided that the best way to ensure future growth, and protect future tax revenues, is to keep its low rates of tax in place.

Tax on corporate and individual income in Bulgaria is 10% - one of the lowest in Europe.

The 2011 budget plan foresees economic growth of 3.6% next year, and tax revenue growth of 5.3%. The government's budget deficit is expected to narrow to below 3% of the national economy next year, from 4.8% this year.

Earlier in the year, the government had agreed to a 'luxury tax' on real estate valued at more than BGN300,000 (EUR153,000), to be levied at the municipal level, but this proposal has been discarded because it was expected to raise very little in new revenues.

TAGS: tax | interest | budget | corporation tax | luxury tax | Bulgaria | tax rates | individual income tax

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