“Bulgaria adamantly opposes the synchronization of the corporate tax rate in EU. Not only Bulgaria but other countries too, oppose this measure so we are strong enough”, Valentin Nikolov, Deputy Chairman of the Economic Committee in the Bulgarian parliament said in an interview for Radio Bulgaria. Bulgaria has one of the lowest corporate tax rates across EU, 10 percent. Ireland with a corporate tax rate at 12.5 percent, is another opponent of the alignment clause in the European fiscal pact. Hungary and Romania with a rate of 16 percent, are also reluctant to accept such a measure. Poland and Sweden withdrew from initial approval for this policy and voiced their reserves. The UK refused to join the pact from the very start. On 30 January, EU leaders are expected to initial the pact for saving the euro during their summit meeting in Brussels. The option of last-minute changes in the agreement remains.
The Bulgarian government has fears that under pressure from big countries, notably Germany and France, direct taxes in Bulgaria may go up. This is laid out in Euro Plus, or Chapter 4 of the pact. “The wording is too general and hence, slippery”, Foreign Minister Nickolay Mladenov said. “So, we are going to perform commitments after accession to the Eurozone.” Finance Minister Simeon Djankov however is not troubled by the common tax policy, because direct taxes remain a “free territory”. For more details we talked to Valentin Nikolov, Deputy Chairman of the Economic Committee in the Bulgarian parliament.
What does Bulgaria gain and lose from the signature of the European Stability Pact?
“In the first place, Bulgaria benefits from the fact that it has done its homework. It can very easily join Euro Plus. Secondly, it is able to take part in the development of the principles and restrictions in the fiscal pact, for example, it can participate in an effort to prevent tax rate alignment. When we are outside a certain process and then decide to join in, it is a more difficult job. Bulgaria provides a good example of fiscal stability and discipline and it is also in a position to be active in decision-making.”
Do Bulgaria’s proposals stand a chance of being adopted?
“Yes, of course. PM Boyko Borissov was on a visit to Germany and met with Angela Merkel. During talks the two leaders discussed Bulgaria’s position and it was more or less accepted by the German chancellor. Bulgaria’s demand for co-financing of projects by 5 percent was not approved. However most proposals are accepted by Germany, the major vehicle in the process.”
What does alignment of economic and tax policies mean?
“There is a convergence program for the alignment of all indirect taxes. We follow this program, and we step tax up every year. I mean excises on fuels, tobacco and alcohol”, Valentin Nikolov said. “For this reason Bulgaria’s main fear is the possibility of synchronization of the corporate tax rate. In fact it gives us a competitive edge and the chance to reach an average EU level through the convergence program. A common corporate tax rate would mean that Bulgaria will lose competitiveness because our economy has lower productivity. To recap: Bulgaria will never concede to this clause”, Valentin Nikolov, Deputy Chairman of the Economic Committee in the Bulgarian parliament, concludes.
Translated by Daniela Konsatntinova
