In the process of examining the available options for raising funds for the Bulgarian state budget for 2025, the Caretaker Finance Minister has proposed a package of measures which aim to have the intended effect.
Firstly, it is proposed the introduction of a “one-off tax amnesty”, which is projected to result in the collection of around BGN 3,9 billion (approx. EUR 1,95 billion) by the end of next year.
The term “amnesty” in this case should be understood, as follows: adoption of legislation pursuant to which 1) taxes accrued, but unpaid for preceding periods shall not be “sanctioned” with interest, if paid by the taxpayers (debtors) in the course of 2025, and 2) any income received, but not declared (hidden income) will also not be “sanctioned” with interest and fines, if paid within the next year.
The second hypothesis allows individuals who have not declared their income to do so once. In this case, although no interest or penalties would be due, the income would be taxed at a higher rate, ranging between 15% and 20%, which in turn raises doubts as to whether the liable persons would necessarily have an economic interest in taking advantage of this particular option.
Other aspects of the 2025 state budget plan are also under consideration, including revisions to certain tax relieves adopted during the COVID-19 pandemic, as well as providing for a tax on excess bank profits.
In particular, the reinstatement of the general VAT rate of 20 % for restaurant businesses and sports facilities is subject to discussion. The currently applicable zero VAT rate on supplies of bread and flour is also under question.
Another major proposed measure is the taxation of excess income of commercial banks in Bulgaria at an increased tax rate of 33 % if their income exceeds certain thresholds. The proposal is based on European acts pursuant to which the increased revenues of oil and petroleum producers were taxed in a similar manner.
All measures to be taken with the budget plan are expected to result in revenues of BGN 9 billion (approx. EUR 4,5 billion) for the state budget. However, the proposed amendments have not yet been incorporated into a draft legislation.
