Bulgarian business groups oppose proposed tax reforms

Business organizations in Bulgaria are expressing concerns regarding proposed changes to tax and accounting legislation by the Ministry of Finance.

The Association of Bulgarian Banks (ABB) has voiced strong opposition to a proposal for a 33% tax on so-called ‘excess profits’ in the banking sector. The ABB argues there is no economic justification for the term ‘excess profit’ and warns that the tax could restrict lending, worsen conditions for clients, and threaten economic growth. The association disputes the government's method of calculation, noting that using the 2020-2025 period as a baseline is flawed because it includes the pandemic-induced economic downturn of 2020 and 2021, which artificially lowers the comparison base.

Separately, the Association of Industrial Capital in Bulgaria (AИКБ) has responded to the Ministry of Finance's legislative package. While the organization views most of the changes positively—such as increasing the VAT registration threshold and extending the period for carrying forward tax losses—it maintains significant reservations. AИКБ warns that certain measures could undermine tax neutrality and predictability. Specifically, they expressed concern over a proposal to limit the deduction of tax losses to 70% of positive financial results, suggesting that companies should be allowed to offset up to 100% of losses during the first five years.