GDP grows at the expense of taxes unlawfully collected from businesses

“The gross domestic product (GDP) has grown at the expense of taxes, unlawfully collected from businesses,” said Bozhidar Danev, Executive Chairman of the Bulgarian Industrial Association (BIA), at a press conference on Monday. According to him, Bulgaria’s GDP for Q1 2012 rose by 0.5%, compared to Q4 2011, although its main components fell: consumption shrank, a trade deficit of BGN 800 mln was registered and public expenditure decreased. “Thus, GDP growth is due to the money collected from fair businesses,” he explained.

Over the last six months, an increase in VAT fraud has been observed and more than BGN 50 mln per month are being syphoned from the Treasury. The main problem is that the VAT Act allows tax officials to charge the tax twice on fair companies. As a result, over 50,000 companies were wrongfully fined. In order to protect the companies operating legally, BIA has sent to the National Revenue Agency (NRA), to the State Agency for National Security (SANS) and to the Interior Ministry a list of about 50 companies, allegedly draining VAT. According to Danev, it is a real epidemic which has spread legally.

“For two years now, Bulgarian companies have been operating in a tax hell and the State is the biggest thief of VAT,” said Kiril Vatev from the Association of Meat Processors. “NRA expects every company to be familiar with the accounting practices of its suppliers, but this is something we cannot have access to. The approach of tax authorities is insidious - they know which supplier has not paid VAT, but they start to penalise everybody, rejecting invoices and it is not clear which deal is accepted as valid. As a result, a number of companies have stopped operating, there are numerous lay-offs and an influx of imported products,” commented Vatev. He added that tax authorities assign controlling functions to legitimate businesses, warning them to be careful with whom they trade. “We are doing business, not investigations,” said Sabina Vlahova from the Union of Bulgarian Millers. According to her, shell companies are untouchable, but the State could deal away with the problem if it so wished.

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