Bulgaria’s Parliament approved at second reading on November 15 amendments to the country’s Value-Added Tax Act implementing a 10 per cent tax on deposit interest, as well as a flat 15 per cent tax on all online and traditional gambling.
MPs approved the amendments after a two-hour debate that rehashed arguments made over the past two months, giving the opposition another opportunity to slam the deposit interest tax proposal, even with the outcome of the vote never in doubt.
The tax would be levied only on fixed-term deposits and would be paid at the end of the month following the quarter in which the interest was due. Banks would be responsible for withholding the tax and paying it to the Budget.
The tax will go into effect on January 1 2013 and is expected to bring 120 million leva in Budget revenue – a minor, but much-needed boost, given the minimum wage hike to 310 leva and the planned increase of pensions by 9.3 per cent, on average, next year.
The tax will be levied on deposits held in Bulgarian banks, but also banks in other EU member states and European Economic Area countries, as well as Switzerland, with which Bulgaria recently signed an amended agreement to disclose banking information.
Domestic consumption has been sluggish in Bulgaria following the global economic crisis, but this has lead to an increase in savings. According to Bulgarian National Bank data, household savings have increased by 54 per cent since the end of 2008, reaching 34 billion leva (about 17.4 billion euro). Less than 10 per cent of all households, however, have savings of more than 20 000 leva (10 000 euro).
Unlike the deposit interest tax, the amendment imposing the tax on gambling revenues passed without debate.
The gambling tax would be imposed on the revenues generated by game operators, ranging from lotteries to races and online games of chance. Initially, the Cabinet wanted to impose a lower tax, of seven per cent, on online games – as an incentive to have companies register their operations in Bulgaria – but it was opposed by the industry, local broadcaster Darik Radio reported.
(Photo: Clive Leviev-Sawyer)