The corporate tax in Bulgaria
Our services in the area of corporate income taxes (CIT) include:
- Preparation of the annual tax return of your company
- Annual tax return payments to the Bulgarian tax authorities by 31 March
- Announcement of corporate balance sheets in the Bulgarian Commercial Register to 30.06.
- Assistance with tax in cases of audits by the NRA
The tax obligations, tentative taxes, tax reliefs and the taxation regime of legal persons and their incomes are regulated by the rules of the Corporate Income Tax Act. According to Article 1, the profits of all resident and foreign legal entities whose activities’ focus is in Bulgaria are taxable in accordance with the Bulgarian legislation. The different types of taxpayers are enumerated in Article 2 of the Act – this includes all resident and foreign legal persons whose main activity is in Bulgaria or who derive their income from a source in Bulgaria. Furthermore, subject to taxation are the foreign organizationally and financially independent entities which are engaged in an independent business activity or investment control, provided that the owner of the income cannot be determined.
According to Article 20 of the Act the rate of the corporate income tax is 10%. It is a flat tax.
There are different rules governing the taxation of domestic and foreign legal persons. The domestic legal persons are taxable with respect to all gains from domestic and foreign sources, whereas foreign companies – only with respect to their operations in Bulgaria and the resulting gains and incomes from them. The annual taxable income is to be declared up to 31 March of the next year.
The law on corporate taxation provides for Corporation tax retention under certain conditions (Art.166). This is the right of any taxable person not to remit to the executive budget the amounts of corporation tax as assessed according to the procedure established by this Act, which subsist in the patrimony of the taxable person and are spent for purposes prescribed by a law. Article 189 of the Act provides further for tax relief in the form of state aid, which is fought under certain legal requirements.
Another tax measure for investment promotion is the reduction in corporation taxes with respect to investments in communities with a high level of unemployment. Under Article 184, the tax reduction can reach 100%.