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establishment are only liable to tax on the profits generated through their Bulgarianestablishment.Tax exemption for manufacturing businessManufacturing companies enjoy 100% exemption of the corporate income taxfor a period of 5 subsequent years in case of investment in depressed regionsand if all the sites and assets (except for cash in bank accounts and equity) ofthe company are entirely located within the administrative boundaries of adepressed region. “Depressed regions” are municipalities with unemploymentexceeding 50% the average of the country and enumerated in a list annuallyapproved by the Minister of Finance. The cost of intangible assets should notaccede 25% of the acquisition costs of the fixed assets. The acquired assets couldnot be disposed for a period of 5 years, except in cases of reorganization of thecompany. At least 25% of the value of the assets must be financed by company`sown funds, including loans. The ownership of the acquired assets can not betransferred for a period of 5 years as of the date of their acquisition, except forin cases of reorganization of the company in compliance with the CommercialLawThe company, which enjoys the exemption, could exercise it, even if as aresult of decreased unemployment, the municipality is excluded from the abovementioned list.Annual depreciation norms (%) are: for computers, software and right ofusing software 50%; for machinery, manufacturing equipment, apparatus 30-50%; for automobiles 25%; for other transportation vehicles including airplanes10%; for steady buildings, facilities, communication devices, electricity carriers,communication lines 4%; for other depreciative assets 15%.Withholding TaxesCertain types of income from sources in Bulgaria and payable to non-resident legalentities (if not generated through a permanent establishment) or individualsare subject to withholding taxes. The types of income are defined in the CITA as:dividends and liquidation quotas; interest, including such under finance leases;royalties; technical services remuneration; rents; payments under operatingleases; franchising and factoring; remuneration under management contracts;capital gains from transfer of shares in local companies; securities issued by theState, a municipality or a local entity and local real estate.The withholding tax rate is 7% on dividends and liquidation quotas and 15%www.sme.government.bg 11
on the other types of taxable income. The withholding tax rate may be reducedunder an applicable double tax treaty.Withholding tax exemption for EU citizensDividends and liquidation shares, distributed by a local person in favour of a foreignnatural or legal person, local for an EU member-country, are not subject towithholding tax under the conditions that:1. According to the tax legislation of the respective EU member-countrythe person is considered as local of this country for tax purposes and by forceof an agreement for avoiding the double tax levying with a third state is notconsidered as local person of a state out of the EU;2. The person is levied with corporate tax, without having right ofchoice or exemption from levying with this tax;3. The person is the actual possessor of the income and holds at least20% of the shares/stocks of the local entity;4. By the moment of calculating of the dividends or the liquidationshares the person has owned the shares/stocks of item 3 continuously for a periodnot less than one year.4.2 VATThe standard VAT rate is 20%. Zero rate of VAT applies to exports of products,certain eligible exports of services, as well as to some other transactions.VAT Credit RefundThe VAT credit to be refunded can be set off against the VAT due, as well as againstother liabilities to the state. The offsetting takes place during a 3-month termfollowing the month in which the VAT credit occurred. If after this term there isstill VAT to be refunded, the taxpayer may request a refund or continue offsettingit in the following months. Within three months as of the date of submitting therequest for refund the tax authorities have to refund the remaining VAT aftersetting it off against any outstanding tax liabilities (there are indications thatthe second 3-month term may be reduced to 45 days).For exporters the VAT refund period is 45 days. Since 1 January 2003 companies,realizing within a two-year period investment projects over BGN 10 million thatcreate over 50 new jobs, are exempt from VAT on their imports.12 BSMEPA
Page 5 and 6: acquired a high value on the Europe
Page 7 and 8: payments (imports of goods and serv
Page 9 and 10: framework 4.1%-6.6%. In 2005 the GD
Page 11: Top 20 Foreign Direct Investors in
Page 15 and 16: Rila, Pirin, Vitosha, the Rodopes,
Page 17 and 18: maize, beans, potato, sunflower, pe
Page 19 and 20: Gorna Oriahovitsa (the latter is us
Page 21 and 22: important sectors like electrical e
Page 23 and 24: fuels, oils and coal (21.6%); consu
Page 25 and 26: 24BSMEPA
Page 27 and 28: 26BSMEPA
Page 29 and 30: Intermediate Body and Projects Impl
Page 31 and 32: EDOARDO MIROGLIO EOOD _____________
Page 33: ESO TRADE Ltd. ____________________
Page 37 and 38: METAL GROUP ELIT 2006 Ltd. ________
Page 39 and 40: REZ Ltd. __________________________
Page 41 and 42: SIS INDUSTRIES Ltd. _______________
Page 43 and 44: protection/, road and railroad brid
Page 45 and 46: At “Vini” every year are bottle
Page 47 and 48: 3. The German-Bulgarian Chamber of
Page 49: ZLATNA TRAKYA JSC _________________

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