Bulgaria mulls hike in deposit interest tax

Written by on November 21, 2014 in Bulgaria - Comments Off on Bulgaria mulls hike in deposit interest tax

Bulgaria’s Government plans to raise the rate of the deposit interest tax back to 10 per cent, mass circulation daily Trud reported on November 21, quoting the head of the interim budget committee in Parliament, Menda Stoyanova from GERB, as saying.

The tax was introduced in 2013, during the first GERB government of Prime Minister Boiko Borissov. It was changed under the now-departed Plamen Oresharski administration to eight per cent in 2014, which also scheduled gradual decreases to six per cent in 2015 and four per cent in 2016 before scrapping it altogether starting 2017.

“We will submit a proposal to increase the rate of the tax on deposit interest back to 10 per cent. I think there is no reason not tax that income,” Stoyanova was quoted as saying.

Trud’s report said that Bulgaria collected 82.5 million leva (about 42.2 million euro) from the tax last year, despite Finance Ministry calculations that it would raise about 120 million leva. For the first nine months of this year this year, the revenue from the tax was 51.9 million leva.

The tax is currently levied only on deposits with a fixed term and is due to be paid at the end of the month following the quarter in which the interest was due. Banks are responsible for withholding the tax and paying it to the Budget.

As part of the changes that will be put forth, all deposits, including savings accounts, will be subject to the tax. The only exception will be made for children’s savings accounts, Stoyanova said.

At the time it was passed in October 2012, the tax sparked heated debates – although the two major opposition parties at the time, which formed the ruling axis backing the Oresharski cabinet after the May 2013 elections did not repeal it, choosing only to cut the tax rate.

It is unclear whether the proposal to increase the rate back to 10 per cent will be backed by GERB’s partner in the government, the Reformist Bloc coalition, given that some parties from the coalition opposed the introduction of the new tax in the first place.

(Photo: Clive Leviev-Sawyer)

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