site.btaBulgarian Industrial Association Backs 2025 Draft Budget with Reservations

The Bulgarian Industrial Association (BIA) supports the 2025 State Budget Bill with reservations, considering the need of adopting a regular budget to meet the criteria for Bulgaria's eurozone entry, the employers' association said in a press release on Friday.

The BIA backs, among other things, the containment of consolidated fiscal programme expenditures to 40%, a budget deficit not exceeding 3%, the retention of direct and indirect tax rates, the eased value added tax treatment for small-sized enterprises, and the cut of the public-administration staff-costs increase from 10 to 5%.

The proposed provisions that the BIA does not back is the increase of retirement insurance contributions by 1 percentage points from January 1, 2027 and by 2 percentage points from January 1, 2028 (excluding the defence sector), the planned increase of the maximum monthly contributory income from BGN 3,750 to BGN 4,130, the proposed lowering of the VAT registration threshold from BGN 166,000 to BGN 100,000, effective April 1, 2025, the proposed introduction of an annual contribution for subsoil resources extraction concessionaires in addition to the contracted payments, the steep BGN 2,149 billion pay rise in the defence and security sector, and the introduction of a Standard Audit File for Tax (SAF-T) which will impose a significant administrative burden on business.

The employers' association is concerned about the planned 11.4 percentage points growth of the general government debt to 35.6% of GDP in 2028 without any clear indications that the proceeds will be spent on public investments with a long-term effect instead of financing current expenditures. 

The BIA warns that the projected substantial increase of indirect tax revenues, mainly due to a 33.6% rise in VAT revenues, may jeopardize the implementation of the budget revenue side. The proposed spending policies are not matched with sustainable long-term revenue measures, and approaches should be sought to defer the abrupt income rises. The proposed reversion to the standard VAT rate for flour and bread and for food service supplies, the increase of excise duty rates for tobacco and tobacco products, and the levy of an annual contribution for 2025 in addition to the concession payments for subsoil resources extraction are likely to boost price inflation.

The association supports in principle the 2025 Public Social Insurance Budget Bill and the 2025 National Health Insurance Fund Budget Bill while expressing reservations about some of the drafts' parameters.