Tax debtors to be rewarded with amnesty and free loans
The tax amnesty proposed by the caretaker government, aiming to collect more than 5 billion levs in 2025, is more unconventional than initially outlined.
Finance Minister Lyudmila Petkova revealed that the state-owned Bulgarian Development Bank (BDB) would play a key role in its implementation. The plan involves capitalizing BDB to provide loans to businesses and individuals who owe taxes, enabling them to pay off their principal debts and qualify for interest exemption.
Details remain unclear, but converting tax delinquents into temporary borrowers raises concerns. The net effect of the amnesty might be lower than projected, especially if significant funding is allocated to BDB. The draft budget allows up to 2 billion levs to be deposited into BDB for various government programs, which might dilute resources meant for tax relief. Critics warn of potential inefficiencies and broader financial risks linked to this measure.
The proposed budget from the interim government was another point of contention. So much so that it forced the Bulgarian National Bank to issue its first ever severe critique of a proposed national budget.
Bulgaria and Romania out of Schengen jail
The EU Council decided today that land border checks for Bulgaria and Romania will be lifted from January 1, marking a significant step towards full Schengen integration. This follows the earlier removal of air and maritime border checks, implemented during Spain's EU Council presidency on December 30 last year. The Hungarian presidency hailed the move as a major victory for both countries and Europe as a whole.
The decision is expected to save Bulgarian and Romanian businesses and citizens hundreds of millions of euro annually, reduce waiting times at borders, and cut emissions from long queues of trucks. Bulgaria's Ministry of Economy estimates a positive economic impact of 1.2 billion levs, with over 450 million levs in direct savings for transporters, manufacturers, and exporters. Conversely, partial Schengen membership was costing Bulgaria annual losses exceeding 834 million euro, according to the Bulgarian Academy of Sciences.
Metal sector withstanding pressure
The metal sector saw a 10% revenue decline in 2023, driven by economic slowdown, reduced demand, and lower base metal prices. Early signs of this downturn appeared in early 2022 as Europe's economic deceleration cooled market activity, marking the first significant contraction since 2019. Of the 50 companies in the sector, only 19 managed to increase revenues, and most achieved only single-digit growth.
Despite a sector-wide profit drop of 0.5 billion levs, companies improved their profit margins from 8% to 9% and maintained or slightly grew their workforce. While 2024 shows promise for a stronger performance, much will depend on downstream demand and the willingness of manufacturers to ramp up production.
Tax debtors to be rewarded with amnesty and free loans
The tax amnesty proposed by the caretaker government, aiming to collect more than 5 billion levs in 2025, is more unconventional than initially outlined.
