Direct taxes - Corporate Income Tax

    Generic part

    Corporate income tax
    Корпоративен данък
    BG - Bulgaria
    BGN
    Date
    Year
    1989/01/13
    2019/01/01
    2019/05/14 11:45:57

    Contact information

    Administration

    Ministry of Finance

    Service

    Tax Policy Directorate

    Website

    http://www.minfin.bg/

    E-mail

    Telephone

    +359 2 9859 2850

    Who sets

    The tax rate is set by

    • Central authority
    • Regional authority
    • Local authority
    • Social security

    The tax base is set by

    • Central authority
    • Regional authority
    • Local authority
    • Social security

    The reliefs are set by

    • Central authority
    • Regional authority
    • Local authority
    • Social security

    Beneficiary

    • Central authority
    • Regional authority
    • Local authority
    • Social security
    • Others

    Geographical Scope

    BG - Bulgaria
    No Yes

    Taxpayers

    Which entities are liable for CIT?

    • Legal persons
    • Organizational units having no legal personality
    • Tax capital groups
    • Associations
    • Foundations
    • Companies having their seat or management office in other countries, provided that in their country they are treated as legal persons and are subject to tax on income
    • Public corporations
    • Others

    Which entities are exempt from CIT?

    Collective investment schemes, national investment funds and other alternative investment fund (in certain conditions);
    Special purpose investment companies;
    Bulgarian Red Cross;
    Organizers of games of chance.

    Domestic-source income of non-resident entities is

    Taxed
    Not Taxed

    Tax object and basis of assessment

    As general rule, taxable income under corporate income tax includes also

    • Interest
    • Royalties
    • Dividends
    • Capital gains
    • Income from immovable property
    • Income from movable property not listed above
    • Income from agriculture

    Income considered

    Domestic income
    Worldwide income (subject to double-tax relief)

    Deductions, allowances, credits, exemptions

    Valuation of inventory

    • First-in first-out (FIFO)
    • Last-in first-out (LIFO)
    • Average cost
    • Specific identification

    Depreciation rules

    Buildings

    Depreciable
    Not-depreciable
    • Straight-line method
    • Declining balance
    • Production method
    • Combination of above
    • Other
    25 Years
    4 %

    Other fixed immovable assets (e.g. machinery)

    Depreciable
    Not-depreciable
    • Straight-line method
    • Declining balance
    • Production method
    • Combination of above
    • Other
    4 Years
    30 %

    Movable (tangible) assets (e.g. cars, furniture, work equipment)

    Depreciable
    Not-depreciable
    • Straight-line method
    • Declining balance
    • Production method
    • Combination of above
    • Other
    7 Years
    15 %

    Intangible assets (e.g. patents)

    Depreciable
    Not-depreciable
    • Straight-line method
    • Declining balance
    • Production method
    • Combination of above
    • Other
    7 Years
    15 %

    Land (if any)

    Depreciable
    Not-depreciable
    • Straight-line method
    • Declining balance
    • Production method
    • Combination of above
    • Other

    Are there limits to interest deductions (other than thin capital rules)?

    No Yes
    Interest limitation rule (art. 43a CITA). See the comment below „Thin Capitalization (TC) rules" item.

    Is there an Allowance for Corporate Equity?

    No Yes

    Exemptions from taxable income

    No Yes
    • Income from participations (dividends)
    • Patents income (e.g. patent boxes)
    • Other, please describe
    In certain conditions:
    - labour costs for hiring unemployed persons;
    - granted scholarships;
    - donations - up to 65% from the accounting profit.

    Expenses that are generally not deductible:

    - costs non-related to the activity;
    - expenses not supported by documents;
    - expenses on fines charged, forfeitures and other sanctions;
    - donation expenses, exept of regulated by CIT Act;
    - expenses which constitute hidden profit distribution;
    - any expenses on bribery;
    - accounting expenses of missing fixed and current assets, and waste of stocks of materials (in certain conditions) etc.

    Losses

    Loss carry-forward exists?

    No Yes
    • Indefinite
    5 Years

    Loss carry-backward exists?

    No Yes
    • Indefinite

    Tax credits available?

    No Yes
    • For research and development investments
    • For training
    • Other, please describe:
    Foreign tax credit in respect of:
    - each tax similar to corporation tax or imposed in lieu of such tax and paid abroad;
    - tax imposed abroad on the gross amount of the income from dividends, interest payments, copyright and licence royalties, technical assistance fees and rents.

    Rate(s) Structure

    10 %
    10 %

    Special tax rate for SMEs

    No Yes

    Measures against profit shifting

    Do Thin Capitalization (TC) rules exist?

    No Yes
    1996/07/01
    • Explicit TC law
    • Part of CIT law
    • Arm’s length
    • Ratio
    3 : 1
    liabilities
    equity
    Internal
    Internal and external

    TC depends on shareholding?

    No Yes
    Direct
    Indirect

    Automatic remedy

    No Yes
    • Non-deductibility of interest
    • Reclassification as dividend
    All companies
    Foreign companies
    Non-EU companies

    Transfer pricing rules exists?

    No Yes
    No Yes
    • Fee
    • Tax base increase

    Special features

    Is group taxation available?

    No Yes

    Is there a specific anti-avoidance provision in the legislation?

    No Yes

    International aspects

     
    Treaty countries
    Non-treaty countries
    Repatriated profits are taxed according to the following system
    • Exemption system
    • Tax credit
    • Deduction
    • Exemption system
    • Tax credit
    • Deduction
    Interest received is taxed
    No Yes
    No Yes
    Tax rate on interest received
    10 %
    10 %
    Outgoing dividends withholding tax
    5 %
    5 %
    Outgoing royalty payments withholding tax
    10 %
    10 %
    Outgoing interest payments withholding tax
    10 %
    10 %
    Foreign losses (of either subsidiaries or permanent establishments) can be set-off
    No Yes
    No Yes
    If yes :
    Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
    Loss carry-forward exists?
    No Yes
    No Yes
    If yes :
    Time limit
    • Indefinite
    5 Years
    • Indefinite
    5 Years
    Size limit
    Loss carry-backward exists?
    No Yes
    No Yes
    If yes :
    Time limit
    • Indefinite
    • Indefinite
    Size limit
    Controlled foreign company (CFC-) rules exist?
    No Yes
    No Yes
    If yes :
    Time limit:
    • Indefinite
    • Indefinite
    Size limit
    Threshold for capital or voting power held directly or indirectly by resident in non-resident company:
    50 %
    50 %
    CFC-rules apply if foreign tax rate is lower than:
    CFC-rules apply for passive income only?
    No Yes
    No Yes

    Tax due date

    When has the tax return to be filed

    • 3 months after closing of the tax period
    • 6 months after closing of the tax period
    • Later than 6 months after closing of the tax period
    • Date set by the Authority
    • Other
    • Extensions of the deadline are possible

    Advance tax payments due?

    No Yes
    • Monthly
    • Quarterly
    • Bi-annual
    • Annual
    • Other

    Tax collector

    General comments

    Economic function

    • Consumption
    • Labour Employed (paid by employers and employees)
    • Labour Non-employed
    • Capital income: corporations
    • Capital income: income of households
    • Capital income: income of self-employed
    • Capital stocks

    Environmental taxes

    • Energy
    • Transport
    • Pollution/resources

    Tax revenue

    d51b + d51c2
    Year Annual tax revenue (in millions) % of GDP % of total tax revenue -
    2017
    2,294.7
    2.271 %
    7.6938 %
    2016
    1,989
    2.113 %
    7.2949 %
    2015
    1,898.8
    2.1437 %
    7.3787 %
    2014
    1,695.7
    2.0246 %
    7.1372 %
    2013
    1,695.5
    2.0711 %
    7.3092 %
    2012
    1,390.4
    1.6948 %
    6.3498 %
    2011
    1,420.8
    1.7593 %
    6.9458 %
    2010
    1,427.7
    1.9094 %
    7.3574 %
    2009
    1,750
    2.3977 %
    8.8297 %
    2008
    2,185.8
    3.0043 %
    9.7773 %
    2007
    2,623.8
    4.1343 %
    13.0832 %
    2006
    1,084.3
    2.0374 %
    6.817 %
    2005
    833.5
    1.7867 %
    5.8617 %
    2004
    1,014.5
    2.4813 %
    7.83 %
    2003
    990.1
    2.7233 %
    8.913 %
    2002
    989.3
    2.9264 %
    10.4585 %
    2001
    1,161.4
    3.7768 %
    12.4536 %
    2000
    742.7
    2.6594 %
    8.5966 %

    Footnotes