TaxationTaxation

Among the Lowest Taxes in Europe  Corporate tax –23.5% –0% in regions with high unemployment, 1/3 of the country’s territory –fast depreciation rates: 2 years for computers, 3 1/3 years for equipment  Personal income tax –highest rate at 29% –rates of 0, 15, 22, 26 and 29% (year 2003)  Capital gains tax: 0%  Interest income tax: 0%

Unemployment % Number Municipalities % % % % (*Average 18.11%) Unemployment Level by Regions ( ) Red Areas with 0% Profit Tax since 2003 (Projected)

Tax and Accounting Reform  Adoption of International Accounting Standards (IAS) from 2003 for financial institutions and public companies and from 2005 for all other companies  Total tax burden falls from 34.2% of GDP (2000) to 31.6% (2002)  Value added tax (VAT) –exemption for imports for investment projects over EUR5m –general tax refund time falls from 4 to 3 months –45 days refund for export-oriented companies –exemption for software exports –registration threshold falls to BGN50,000 from BGN75,000

 A new partially state-funded private equity fund (over EUR100m) to provide alternative business financing, especially to small and medium enterprises  Aggressive tax breaks (0%) for investors in areas with high unemployment  Planned creation of industrial zones  Pending legislation that will give Bulgaria the fastest bankruptcy and liquidation procedures in Europe Second Generation of Economic Reforms in

Source: Ministry of Finance Total Tax Burden (% GDP)

Source: Ministry of Finance Personal Income Tax Rates/Brackets (%, )