September 16 2022

Bulgaria to Amend State Aid Legislation

Source: IBFD Tax Research Platform News

The Ministry of Finance has launched a public consultation on proposed amendments to the Corporate Income Tax Act, which would align the Bulgarian legislation with the European Commission's Guidelines on regional State aid (2021/C 153/01). The proposed legislation would amend the rules for applying tax relief for regional State aid which were in force until the end of 2021.

Currently, a tax incentive consisting of remission of corporate income tax up to 100% is applicable to enterprises conducting manufacturing activities in municipalities with a high unemployment rate. The amendment would extend the scope of the sectors in which the tax relief cannot be applied (e.g. by including the lignite coal sector). Furthermore, the scope of the tax relief would be limited to micro, small and medium-sized enterprises.

The new rules are envisaged to be applied during the period 2022-2027, following an approval from the European Commission.

The full text of the proposal, issued on 5 September 2022, is available here (in Bulgarian only).

The public consultation will be open until 5 October 2022. Further developments will be reported when they occur.