site.btaStudy Sets Unpaid Taxes at LV 22.6 Bln in 2008-2016, Blames It on Growth of Shadow Economy

Sofia, September 28 (BTA) - Unpaid taxes during the 2008-2016 period stood at over 22.6 billion leva and this is likely to be a significant underestimation, Bulgarian Industrial Association (BIA) Executive President Bozhidar Danov told a news conference here Thursday as his organization released a study on the shadow economy in Bulgaria.

The BIA has come to the figure using digital data of the National Statistical Institute, Eurostat and other sources of statistical information.

The average annual fluctuations of the shadow economy during the 2007-2016 period was 3.1 per cent as the biggest was a 5.02 per cent increase in 2010 and the smallest was a decrease of 0.02 per cent in 2008, according to the study.

BIA says that a cause of particular concern is the shrinking share of paid VAT and corporate income tax in the revenue side of the national budget. VAT payments have contracted from 34.1 per cent to 32.9 per cent and the corporate income tax to 8 per cent from 9.5 per cent of all tax revenues.

Danev said that the evasion of corporate income tax is widespread and that the companies in the TOP 50 in terms of revenue report zero profit.

The revenue from excise duty has been largely unchanged despite the changes in the excise rates and the volume of sale of excise goods, the BIA President noted.

BIA proposes a package of measures to reduce the volume of the shadow economy. These include stepping up the introduction of the EU directive concerning VAT refunds, corrections in the procedure for restoring health insurance rights, a check of the payment of pension insurance contributions in state-owned and municipal organizations, where compliance is shrinking, early enforcement of the directive whereby a corporate income tax is charged where the product or service originates which will stop the export of national product by transferring profits, as well as scrapping the minimum social insurance threshold, which generates shadow economy.