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Finance Minister Simeon Djankov has argued that tax-free interest income from deposits of natural persons is a regressive practice because it is the rich who have bigger deposits. Photo by BGNES
Bulgaria's Council of Ministers will submit to Parliament a proposal for the adoption of a 10% tax rate on interest earned on deposits of natural persons.
The proposal, which was approved by the government on Wednesday, is part of the legal amendments related to the adoption of the draft budget 2013.
"Interest earned on deposits of natural persons will be taxed at 10% starting 2013," Finance Minister Simeon Djankov said at a press conference on Wednesday.
He added that Bulgaria was the only EU Member State to not tax deposit interest earned by natural persons.
Djankov suggested that the step would bring extra budget revenues of around BGN 120 M, adding that the emphasis was not on the financial effect since purpose of the new tax was to ensure justice.
The Finance Minister argued that it was high time for the rich people in Bulgaria to start paying more taxes than the poor.
According to recent data of the Bulgarian National Bank (BNB), deposits of natural persons exceed BGN 34 B.
BNB statistics indicates that deposits of natural persons increased by 54% since the onset of the crisis in end-2008.
Two-thirds of the deposits of natural persons are sums of up to BGN 1000 and they have been deposited for periods of 6-12 months.
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