Bulgaria Borisov: No Tax Hikes by 2012

“Taxes will not be increased even in 2011,” Boyko Borisov told the morning broadcast of the private TV channel bTV on Thursday. Photo by BGNES

Bulgaria’s prime minister has denied reports that a hike in tax rates may be looming after the government scrapped its plans for a VAT increase this year, which was hoped to plug a budget gap that has thwarted the new EU member's euro efforts.

“Taxes will not be increased even in 2011,” Boyko Borisov told the morning broadcast of the private TV channel bTV on Thursday.

The comment comes a month after Menda Stoyanova, head of the parliamentary budget commission, said it is very likely that Bulgarians will have to say goodbye to the flat tax.

That was the first time when a high-ranking representative of the ruling center-right GERB party admitted a personal tax hike is on the agenda of the government, even though speculations about a possible increase have been going on for months.

Bulgaria has the lowest personal and corporate income tax in the EU at 10%, which was introduced at the beginning of 2008, replacing the previous system, which combined several different tax rates - between 20 and 24%, depending on income.

Bulgaria, with a 10% flat rate, sill has the lowest personal tax rate among European Union member states.

Bulgaria also has the lowest social security rates, which coupled with a 10% flat rate, makes it very attractive for physical entities, employers and potential investors.

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