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Donka Pechilkova |
The Bulgarian Parliament adopted a new law, which concerns offshore companies and their activity in the territory of Bulgaria. The decrees of the new Act on Economic and Financial Relations of Companies Registered in Jurisdictions with Low Tax Regime and their Real Owner started to be applied effectively from January 1 2014. According to the law, the partnership, direct or indirect, of companies that have been registered in jurisdictions with a privileged tax regime is forbidden in 28 key sectors of the Bulgarian economy. It means that entities established in countries where income or corporate tax rates are 60% lower than respective rates in Bulgaria are not allowed to participate in tenders for public procurements; privatisation transactions; concessionary competitions; deals, concerning municipal or government property. There are restrictions for sharing of offshore companies in procedures for obtaining of general credit institution licenses, such as insurance licenses, as well as licenses for gambling activity, healthy-insurance funds, mobile services providers. Also, entities registered in jurisdictions with low tax regimes and whose real owner is unknown cannot participate or act as a publisher of periodical press. Another sector, which is closed for offshore companies, is the area of social agencies that are preparing and sharing public sociological analysis.
It is important to note that the above restrictions are not applicable under certain circumstances. In case the offshore companies participate in a company whose shares are brokered to a regular market in an EU or EEA member state. Another option is if the mother company or a daughter company of the offshore entity is a Bulgarian local resident and its shareholders-Bulgarian physical persons are known. The law even goes further and allows the participation of offshore companies in entities that are publishers of periodical press, in case they submit by official procedure information regarding their real owners. It is a very sensitive issue, as one of the main reasons for preparing and passing of such a law is the fact that for more than 20 years in Bulgaria plenty of entities that have unknown shareholders have been operating, forming about 20% of foreign investments in Bulgaria.
This new Act is coming at a time, when Bulgarian society needs tangible actions from the government to show yearning for fighting against the grey economy in the country and guarantee long-term prosperity of Bulgaria.
Donka Pechilkova (donka.pechilkova@eurofast.eu)
Eurofast Global, Sofia Office
Tel.: +359 2 988 69 78
Website: www.eurofast.eu
