Bulgaria To Introduce 10% Flat Tax On Businesses

Wants to bring underground economy out in the open

Bulgaria's government said July 30 it had decided to introduce a flat tax of 10% in 2008 for all businesses to combat the widespread unreported income and tax evasion. The measure "will boost competitiveness and prompt the companies working in the underground economy to come out in the open," Economy Minister Petar Dimitrov told Sega daily newspaper.

Last October, the government cut corporate tax by five points to 10%, making it the lowest in the EU. But big businesses have many times warned that a third of all company turnover in the country is made under the table, leading to billions in unreported income, scraped social security payments and evaded taxation. The problem is especially widespread in small and medium enterprises that make up 98% of all companies in Bulgaria and in sectors such as construction, tourism, farming and services.

The Bulgarian economy grew by 6.2% in the first quarter of 2007 and the government is targeting a 5.8% end-year growth.

Copyright Agence France-Presse, 2007

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