Eleonora Negulova, chairwoman of the National Association of Small and Medium-sized Businesses, warned that the draft budget for next year could hit small enterprises like an avalanche. Speaking to Bulgarian National Radio, she said that a wave of measures, including a 2% rise in pension contributions and a 10% dividend tax, will leave little time for companies to adjust before January.

Negulova illustrated the pressure on micro-businesses, where a single manager and an outsourced accountant must cope with the transition to the euro, new tax software, and rising salary obligations. With over 600,000 employees in small and medium-sized enterprises earning mostly minimum wages, she noted it will be extremely difficult to cover higher social security contributions without increasing prices, cutting work hours, or downsizing operations. The dividend tax, she added, will likely be a secondary concern, as profits may not even materialize under these conditions.

She highlighted that small businesses represent 99% of Bulgarian companies, with more than 40% being family-run operations of fewer than ten employees. These businesses will bear the brunt of the proposed measures, she said, and their capacity to respond is limited. Negulova emphasized the need for a roadmap to help companies plan and restructure rather than dealing with the changes in an ad hoc manner. Otherwise, some firms may be forced to reduce staff, scale back operations, or operate in the informal economy, which could ultimately undermine tax collection and economic stability.

Source: BNR interview