EKIP– Expert Club for Economics and Politics A Different Opinion
Bulgaria introduced the rules for imposing a global minimum tax on large multinational and national groups of enterprises at the very end of 2023. This happened after the long delay, lack of open public discussion, and last-minute changes to the voted texts, which are traditional for the Bulgarian legislative process.
The topic remained hidden from the general public, on the one hand, under the guise of the latest requirements imposed on Bulgaria by the EU. On the other hand, the introduction of such an additional tax seemed like a good opportunity to collect additional budget revenues through the tools of the national additional tax.
This abrupt and non-dialogical introduction of the global minimum tax was driven by the understanding that corporate taxation in Bulgaria was very low. For this reason, it was decided that not only should Bulgaria introduce a national additional tax, but also that the reliefs provided for by both the OECD Pillar Two project and the European Directive should not be applied.
In this study, we will demonstrate that the assumption of low corporate taxation in Bulgaria is a myth, and that Bulgaria is, without exception, the only (!) country in the EU that has introduced a national additional tax without providing the reliefs and exemptions provided for this purpose.
Highlights:
- There is a misconception in Bulgaria that the effective taxation of business in our country is low - globally, 54% of the profits of large multinational groups are taxed at an effective tax rate lower than 10%.
- Bulgaria is the only country in the EU that has introduced a national additional tax, but has not allowed full relief for essential business activities.
- Bulgaria is the only country in the EU that has introduced a national additional tax but has not adopted the exception for smaller "de minimis" cases.
- It is not yet too late to correct the mistakes made in the implementation of the global minimum tax in Bulgaria through a brief change to the Corporate Income Tax Act, proposed in this material.
