Bulgaria FinMin: VAT Cut Next Year Not Ruled Out

Bulgaria's Finance Minister Simeon Djankov. Photo by Sofia Photo Agency

Bulgaria's finance minister has confirmed that the prospect of a cut in the value-added tax (VAT) rate, which now stands at 20%, is likely next year.

Speaking in an interview for Trud daily Minister Simeon Djankov pointed out that to be successful tax changes of this kind have to come as a surprise.

"Otherwise consumption can grind to a halt, waiting for the new VAT to come into force. There is a risk of artificially slowing down consumption."

Asked whether these tax changes are possible next year, Djankov replied:

"I do not rue out surprises."

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.

Plans for a VAT increase emerged at the beginning of last year, running counter to the promises the center-right government made after coming into office.

Right after the elections in the summer of 2009 the cabinet had vowed to cut the tax from the current 20% to 18% in 2010 and by a further 2% by the end of its term.

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