The taxable income of the Bulgarian company would be subject to Bulgarian CIT of 10% (flat rate) levied on the annual taxable profit of the Bulgarian company for the respective fiscal year. The fiscal end financial year in Bulgarian coincides with the calendar year. The taxable result of the Bulgarian Company would be its annual financial result, determined on the basis of the applicable accounting standards adjusted with certain statutory add-back and deductions for tax purposes. According to the provisions of the Bulgarian Accountancy Act (AA) the Bulgarian companies are allowed to apply International Financial Reporting Standards (IFRS) and National Accounting Standards (NAS) for small and medium-size enterprises for their financial reporting purposes.

In case a company realizes tax loss in a particular period, it would be statutory allowed to carry forward this loss in the following five consecutive years and offset its potential taxable profit realized during this period (resulting in a temporary tax or entire amount of the tax difference). If a company does not generated sufficient taxable profit to utilize part or entire amount of the tax loss within the five year period the respective temporary tax difference becomes permanent.