Rules, Regulations and Transaction Costs in Transition Bulgaria

Table 31
Percentage Total Production Trade Services Sofia Large
district
centre
Smaller
town
Up to 5 days 42.5 31.3 41.4 66.7 38.1 38.9 46.0
5 - 10 days 23.3 12.5 28.6 22.2 23.8 22.2 23.8
10 - 20 days 11.7 18.8 10.0 5.6 9.5 19.4 7.9
20 - 30 days 20.0 31.3 20.0 0 23.8 19.4 19.0
n/r 2.5 6.3 0 5.6 4.8 0 3.2
According to the Code of Compulsory Social Security, insurers must submit to the National Social Security
Institute, on a monthly basis and separately for each employee, the following data:
• income chargeable for social security purposes;
• amount of contributions for social security, health insurance, for the Vocational Training and Unemployment
Fund and for supplementary compulsory pension insurance;
• amount of social security benefits paid out and working record.
The filling and submission of declarations containing these data take 2 days on average, with a maximum period
of 20 days.
37.6% of the sole proprietors interviewed do not pay sickness benefits or child allowances to their employees.
60% of those do not pay, because they do not have employees with children under age, 17% because they do
not hire employees at all, and 3.1% refrain from paying, because of the huge bureaucracy at the National Social
Security Institute.
The practice shows that, during the study period, sole proprietors are placed in a particularly disadvantageous
situation as insurers. Like all other insurers, they also pay monthly social security contributions by bank transfers.
However, if they claim reimbursement by the National Social Security Institute of sickness benefits and child
allowances paid out to their employees, the claim must be certified by an inspector of the National Social Security
Institute and could only then be deposited at the insurer's bank 36 . This process takes 2 days on average, with 30
days being indicated as the maximum.
The maximum indicated periods of interaction with the National Social Security Institute are largely exaggerated
and rather mirror the negative attitude of entrepreneurs to the bureaucracy and to the work of that institution.
As a result of various instruments of primary and secondary legislation, Bulgarian entrepreneurs must file
numerous declarations, statements, etc.
In addition to the declarations filed with the National Social Security Institute, already referred to, we could list
the following examples:
— annual tax return;
36 This situation was changed at the beginning of year 2000. At the present time sole proprietors are equal in rights to the
other insurers.
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