Bulgaria Finance Minister Reiterates Intention for New Tax Cuts

Finance Minister, Simeon Djankov, has made clear his intention to reduce Bulgaria’s value-added tax from 20% down to 18% or even 16% by the end of the GERB cabinet’s term in 2013.

During a visit to the northeast town of Dobrich, Djankov said he opposed the idea of differentiated VAT rates on some items such as medicines and textbooks because once the flat tax system was broken, that would lead to massive demands for concessions in all sectors.

Djankov cited as a bad example in hand Bulgaria’s tourism sector where the VAT rate is only 7%. In his words, the low VAT enabled the random construction of many economically unsound hotels which then went bankrupt.

“I hope that next year, if the incomes start rising again, and I am sure they will, that we will have the opportunity to reduce the average social security payments by another 3%. I realize that the planned reduction of 2% starting January 1, 2010, is a necessary though not a very big help”, Djankov said.