Banks in Bullgaria to Add More Fees to Taxed Deposits

Finance | October 12, 2012, Friday // 12:46|  views

The Bulgarian government insists the new tax aims to raise BGN 120 M and force richer people to pay taxes on the income they earn from bank deposits. File photo

Banks in Bulgaria will charge an additional calculating and transfer fee on top of the planned 10% tax on people's income from their bank deposits.

The information was reported Friday by Standard daily.

The new 10% levy on people's income from bank deposits' interest will be automatically deducted and transferred to the National Revenue Agency.

It will be calculated from January 1 next year, meaning deposits made in 2012 will be taxed only on the 2013 income.

The tax also includes saving accounts. The total number of deposits in Bulgaria is 12 262 067 with BGN 32 431 731 000 in them by the end of June, 2012, meaning a number of people have more than one deposit. 10 301 163 of these deposits have BGN 2 500 or less.

An analysis by Bulgaria's biggest bank UniCredit Bulbank showed an interesting trend – in times of crisis people with larger deposits tend to increase the amounts in the bank accounts, while those with smaller savings have them downloaded.

Moreover, it appeared that over two thirds of the money deposited in banks are in the hands of just 5% of the households in the country.

Economists and the central bank have slammed the government's decision to introduce the tax, saying this would dent people's savings and shake the bank system foundations due to capital outflow.

The government said the new tax aims to raise BGN 120 M and force richer people to pay taxes on the income they earn from bank deposits.

Members of the Parliament from the ruling, center-right Citizens for European Development of Bulgaria party, GERB, are quoted saying off-the-record that their ranks are spilt on the issue. Some admit the year of parliamentary elections is not the best time to introduce new taxes and oppose the way it was done – first the Finance Ministry launched the idea; rejected it after strong public opposition, and at the end included it in the draft 2013 budget.

They further report that the idea masterminded by Finance Minister, Simeon Djankov, has found its place in the State budget without being debated by the Council of Ministers and without Prime Minister, Boyko Borisov, voicing an opinion.

President, Rosen Plevneliev, and Vice President, Margarita Popova, both former members of the GERB Cabinet, expressed their surprise by the move. Plevneliev highlighted the need of having a serious debate, while Popova went even further, stating such tax is useless and would simply add to people's stress.

Meanwhile, GERB launched a media campaign to defend the planned tax, prompting many MPs to say they think it would pass in plenary hall.

Banks in Bulgaria continue to record steady growth in savings, a trend which has been gaining momentum throughout the past half year, official data shows.

There has been recently a noticeable trend among Greek and Romanian citizens and businesses, who prefer to open deposit accounts in Bulgarian banks, bankers have commented.

The Bulgarian banks stability and their more attractive interest rate policy are the main reasons for the interest of Greek and Romanian citizens and companies, according to the bankers.

Meanwhile, a survey has shown that over the last five years only 45% of Bulgaria's population disposed of sufficient incomes to be able to put aside regular savings, predominantly small sums of BGN 100 per month.

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Tags: National Revenue Agency, GERB, fee, tax, Finance Ministry, Bulgaria, banks, Finance Minister Simeon Djankov, interest, bank deposits, Bulgarian National Bank, draft budget, Council of Ministers, Rosen Plevneliev, Margarita Popova, Boyko Borisov


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