All the companies operating in Bulgaria – local, foreign, offshore, branches of foreign companies, etc. are a subject of corporate taxation.
The corporate income tax rate is 10% in Bulgaria and it is based on the net profit. It is calculated annually for the period between 1st of January to 31st of December. The companies are due to pay advance payment based on the profit declared for the previous year.
All companies registered in Bulgaria are obliged to submit annual declaration with annual balance sheet till 31st of March for the previous year, no matter if they have activity or no.
Other taxes in the Corporate Law:
In some cases companies should pay taxes for expenses made. These are the expenses which are not related to the basic activity of the company and/or used for personal needs of shareholders, managers, employees. The tax rate is 10% for expenses for representative events; celebrations; social expenses such as food, clothes, transport for the employees and managers; car expenses if the car is not used for the basic activity of the company
There is a dividend tax in Bulgaria at a rate of 5%. In order to contribute the profit of the company to the shareholders, the company should deduct percentage from the amounts and transfer it to the state.
The assets purchased by the companies are not considered as expense at the moment of the deal. They transfer their value in expenses monthly according to the percentage in the corporate law. The annual rates are:
• 4% for buildings
• 30% for machineries and equipment
• 10% for transport vehicles (excluding light vehicles)
• 50% for computers and software
• 25% for light vehicles
• 15% for all other assets
The bases for calculating the value of the assets are:
“Historical” price – expenses done to create the asset;
“Acquisition” price – price paid according to the documents;
“Fear” price – evaluation done by court expert, if the asset is received by donation or other free way, through which the actual price cannot be proved.
Reduction of the corporate income tax:
The corporate tax may be reduced:
• By 10% of certain acquired fixed assets (applicable for companies operating within regions of high unemployment);
• With the mandatory social security contributions paid by the employer with regard to the hired new employees within regions of high unemployment;
• By 60% – applicable for agricultural production entities;
• By 50% – applicable for social security and health insurance funds established by law, state schools and universities;
• By 20% – applicable for private schools and universities;
Full granting back of the corporate income tax:
The corporate income tax due is fully granted back for investments and production activities in high unemployment regions.