site.btaUPDATED 2025 State Budget Draft Not Proposing Increases in Important Taxes or Revocation of COVID Supplements to Pensions

The draft of the 2025 state budget does not propose increasing social and health insurance contributions or revoking COVID supplements to pensions, or increasing taxes such as corporate income tax and personal income tax, Finance Minister Lyudmila Petkova told journalists on Monday.

Planned measures to boost public revenues are expected to put an additional BGN 9 billion into the public purse, Petkova said. These measures include raising the excise duty on cigarettes, amnesty for overdue liabilities to the Exchequer, encouraging tax compliance, a possible bank windfall tax, and reverting to a single VAT rate for all economic sectors.

The other budgetary measures for next year are on the expenditure side of the draft scheme, with talks underway about planned wage increases in some sectors, she said.

The Finance Minister noted that revenue boosting measures should take account of inflation levels as Bulgaria wants to meet the price stability requirement for eurozone entry.

She expressed hope that the 2025 State Budget Bill will be voted into law by the end of 2024, but did not rule out that the 2024 budget may be expanded into 2025.

The "amnesty" is expected to bring to the Exchequer some BGN 3.9 in taxes and social insurance contributions. "This is more like voluntary payment of taxes and social insurance contributions. Individuals who by December 31, 2024 have declared due payments but fail to pay them up, will have an opportunity to pay the principal and the interest will be written off. It will be a one-off measure that will apply for individuals, private, municipal and state-owned companies," the Minister explained.

Individuals who have not declared income, will be offered an opportunity to do so but the tax rate will be higher than the normal 10%: 15% or 20%, but no fines will be charged Petkova said. She added that such a measure for individuals has been applied in Italy, Spain and Belgium. In Bulgaria's case, it is expected to bring an extra BGN 500 to 800 million in the public purse.

As for the possible windfall tax for banks, the matter is being discussed with the political parties but not yet with the banks themselves. "If a decision is made to implement this measure, it will likely be based on a European regulation that defines excessive profit," the Minister explained. Based on that the tax will likely be some 33%, she added.