Members of the Budget Committee in Bulgaria's Parliament voted in favour of amendments to the Penal Code which provide for heavy penalties for concealed evasion of social insurance contributions.

Among the heaviest penalties are imprisonment from two to eight years and confiscation of property.

The heaviest penalty will apply in cases of concealment of contributions that amount to more than BGN 12 000.

An imprisonment of five years and a fine of BGN 2000 await those that conceal contributions worth more than BGN 3000.

According to the adopted amendments, penalties will be applied for the evasion of compulsory contributions for the State Social Insurance or health insurance.

Acts that breach the law include the declaration of insurable earnings lower than their real amount, failure to submit declaration, the submission of false declaration, the destroying or concealment of accounting documents and registers.

The amendments were approved with 11 members voting in favour, 1 against, while 6 abstained.

The memorandum of understanding signed by the government and the trade unions on Sunday, provides for the criminalisation of social insurance fraud, pertaining to concealment of social insurance contributions on behalf of contributors and self-insured persons.

The members of parliament also approved amendments to the Social Insurance Code, according to which people entering the labour market from 1 January 2015 will have to state within a year whether they will be using a pension fund.

Unless they do so, their contributions will automatically be transferred to the National Social Security Institute.

People born after 1959 will have the right to choose whether they would like to reject the second pillar of the pension system, in which way their contributions will go to the National Social Security Institute.

Budget Committee Chair Menda Stoyanova said that the heavy penalties will be applicable only in cases of fraud and purposeful concealment of contributions.