Bulgaria Loses BGN 440 M a year to Tax, Social Security Evasion

Business » FINANCE | February 7, 2014, Friday // 11:55
Bulgaria: Bulgaria Loses BGN 440 M a year to Tax, Social Security Evasion Photo by BGNES

Bulgaria loses at least BGN 440 M a year to tax evasion and social security evasion and the so-called envelope wages, according to a report of the National Revenue Agency (NRA).

Envelope wages, also known as grey pay, through which employers evade their full social insurance and tax liabilities, are among the most common type of violation.

Another opportunity for evading the full amount of social insurance and tax liabilities is unreported work, with employers declaring that their employees work on a 4-hour schedule when they actually work longer hours.

According to a survey, as cited by money.bg, a total of BGN 8.394 B in taxes on natural persons and social security contributions is collected on an annual basis and 5% of the sum does not enter the state coffers.

However, receipts from VAT and excise duty, at BGN 11.421 B, to which each person contributes by consuming, suggest that 26.5% of them are not backed by taxes or social security contributions.

A number surveys indicate that the business sector in Bulgaria has engaged in massive evasion of various types of payments and turnovers over the past few years.

According to a recent international survey, the share of the grey economy in Bulgaria stands at 31.2% of the GDP, or BGN 25 B.

According to the NRA report, some 54% of employers would commit fraud by not declaring the full amount of salaries of their workers.

According to a survey of Bulgarian think tank Institute for Market Economics, around 25% of the working population in the country is employed at the minimum threshold for the respective job, as a result of which over 550 000 people out of a total of 2.23 M employed persons, receive the lowest payment in the sector.

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Tags: tax evasion, National Revenue Agency, NRA, Social Security Code

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