site.btaCEIBG President Says Shadow Economy Accounts for over 30%

CEIBG President Says Shadow Economy Accounts for over 30%

Sofia, September 25 (BTA) - With a shadow economy of over 30 per
 cent, Bulgaria ranks high in the EU according to this
indicator, said Kiril Domouschiev, President of the
Confederation of the Employers and Industrialists in Bulgaria
(CEIBG). He addressed a roundtable on Friday, which is part of a
 national campaign titled Bringing Business into the Open for a
Better Future.

Domouschiev said that the business community cannot rely only on
 the legislature and the executive to control the grey economy.
"We too should exercise control," he said.

Tax dodging causes the EU to lose around 1 trillion euro of
income each year according to the European Commission, said
Plamen Dimitrov, President of the Confederation of Independent
Trade Unions in Bulgaria (CITUB). At 30 per cent, the grey
economy costs Bulgaria 25,000 million leva of GDP.

Dimitrov called for a differentiation between several concepts:
grey economy, black economy and contraband, and informal
economy. "The government must clamp down on the black economy;
together with businesses we must fight the grey economy; and the
 informal economy must be legalized, not killed," he said.

Dimitrov added that in the last 10 years Bulgaria implemented
about 300 policies for dealing with the grey economy. However,
their impact was short-lived and the proportion of the grey
economy changed very little as a result.

Dimitrov said that minimizing the grey cash flows was key, and
added that public procurement orders generated a huge grey
turnover, with 6,000 million to 8,000 million leva in public
money entering businesses every year under the Public
Procurement Act.

CITUB and CEIBG will come up with a project helping the top 100
Bulgarian companies promote their good practices of corporate
management, working conditions and tax compliance to their main
subcontractors.

CITUB suggests that the National Revenue Agency should check
employers who oppose minimum contributory income bargaining.

Finance Minister Vladislav Goranov said at the forum that the
grey economy erodes democracy and the rule of law. He warned
that if the grey economy continued to be tolerated, the steadily
 growing debt burden would become a huge challenge in the coming
 years. "We cannot accept that each government's term in office
generates new debt of about 10 per cent of GDP," he said.
Commenting on the tax system, he noted that both employers and
employees tend to accept it as a good model established in
Bulgaria in recent years.

Goranov said that the contribution of Boyko Borissov's cabinet
to bringing the grey economy into the open amounted to 1,600
million leva more in taxes and social and health insurance
contributions as at September 24.

Tax evasion by natural persons will be targeted with the
instruments of the effective legislation, the Finance Minister
said. As to juristic persons, the Excise Duties and Tax
Warehouses Act will impose restrictions on depositors in tax
warehouses. Now it is the licensed warehousekeepers who bear the
 brunt of control insofar as excise duties are concerned.
However, many breaches occur outside the realm of excise duties,
 said Goranov. The government is also planning measures to bring
 into the open certain sectors, including car repairs and sales.
 
Tourism Minister Nikolina Angelkova said the grey sector in
tourism is over 50 per cent. If it is brought into the open,
there will be investments in infrastructure, advertising,
education, the workforce and ancillary activities.