Bulgarian Socialists Plan to Annul Deposit Tax

Business » FINANCE | July 2, 2013, Tuesday // 13:35
Bulgarian Socialists Plan to Annul Deposit Tax: Bulgarian Socialists Plan to Annul Deposit Tax Economists and the central bank have slammed the decision to introduce a 10% tax on bank deposit income, saying this would dent people's savings and shake the bank system foundations due to capital outflow. File photo

The Bulgarian Parliament is planning to annul at the beginning of 2014 the "unfair" 10% levy on people's interest earned from bank deposits.

The statement was made by the Member of the Parliament from the Bulgarian Socialist Party, Dora Yankova, BSP, who is part of the parliamentary committee on budget and finances.

The tax was proposed by former Finance Minister in the Cabinet of the Citizens for European Development of Bulgaria party, GERB, Simeon Djankov, and was slammed by the then opposition, including BSP, who voiced concerns that the new tax will affect mainly people with small savings and retirees.

Yankova says this was the most unjust move of Djankov as it taxes hard-earned money of common Bulgarians and it was GERB's way to place the burden from the economic crisis on the poorest and most honest Bulgarians.

She noted the true problem at the moment were the huge tax-free offshore accounts of wealthy Bulgarians depriving the State.

The controversial 10% levy on interest earned from bank deposits came into force in Bulgaria on January 1, 2013.

It obliges Bulgarians to include the income on bank deposits in their tax declarations a year later – in 2014 – after the taxation process is streamlined.

The so-called termless deposits, saving accounts, child savings and current accounts are not taxed.

The banks are responsible for declaring the tax while only those who file written declarations with the National Revenue Agency, NRA, will be mandated to file declarations on tax from deposits. Taxation on interest earned from deposits is done at the time it is paid, even if the account was opened in 2013.

Economists and the central bank opposed the decision to introduce a 10% tax on bank deposit income, saying this would dent people's savings and shake the bank system foundations due to capital outflow.

The GERB government insisted the new tax aims to raise BGN 120 M and force richer people to pay taxes on the income they earn from bank deposits.

On other issues, Yankova announced the pending approval of few important Bills.

The first one is the Employment Act aiming at dealing with youth unemployment by offering incentives to employers hiring young people under the age of 29. The State will use EU funds to reimburse employers for part of the benefits of these young workers.

The second Bill has the goal of improving care for the elderly by annulling the gradual increase of retirement age; giving opportunities for early retirement to people who are up to 2 years short of the required age and years of service; reinstating the so-called Swiss rule in updating pensions and the Christmas bonuses.

Yankova explained there will be amendments to lobbyist texts in 64 Acts passed by GERB.

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Tags: Dora Yankova, GERB. BSP, Council of Ministers, draft budget, Bulgarian National Bank, bank deposits, interest, Simeon Djankov, finance minister, banks, Bulgaria, GERB, Retirement, youth unemployment
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