site.btaCustoms Duty and VAT Revenues Fall Drastically Behind Imports and GDP Growth, Study Shows

Sofia, April 24 (BTA) - There is no logical explanation why customs duty revenues in Bulgaria have fallen drastically behind imports and why VAT and excise duty revenues have fallen behind GDP growth. This is one of the conclusions of Vesselin Iliev, Chief Director for International Economic Cooperation at the Bulgarian Industrial Association (BIA), who has analyzed Bulgaria's foreign trade and some domestic macroeconomic parameters in the period from 2007, when Bulgaria joined the EU, until 2017. Iliev's analysis was unveiled by BIA press office on Tuesday.

Over the period in review, imports from non-EU countries to Bulgaria increased by 4%, while revenues from customs duties and customs fees remained unchanged, the expert says, noting that tariffs were practically the same throughout the period. Iliev calls for a more in-depth study to explain the changing ratio between imports, on the one hand, and VAT and excise duties charged on imports and domestic sales, on the other hand. The VAT rate did not change between 2007 and 2017, but VAT revenues increased by 41%, which was more than import growth and less than GDP growth (55%). Although excise duty rates increased steadily and the excise duty base expanded, revenues from excise duties grew by a smaller margin (50%) than GDP.

Bulgaria's accession to the EU in 2007 triggered structural changes in the country's economy. Since then, foreign trade has exceeded GDP, except in the crisis years 2009 and 2010, the analysis shows. The ratio of imports to GDP fell gradually from 68% in 2007 to 60% in 2017, while the ratio of exports to GDP rose from 42% to 53%.

Despite the country's good export performance, the growth of revenues from corporate taxes on domestic and foreign market operations visibly fell behind, Iliev notes.

One positive change is the decreasing role of the export of petroleum products. While total exports almost doubled during the reporting period, petroleum product exports fell by 5% in financial terms and 6% in terms of tonnage. This makes sense because fuels have not been the top export item for three years now. (Fuels and lubricants are the two main types of petroleum products on Bulgaria's export list.