|Baker Tilly Klitou|
|Delchev & Partners|
|CMS Reich-Rohrwig Hainz|
|Djingov, Gouginski, Kyutchukov & Velichkov|
|Kinkin & Partners|
|Tax & Financial Solutions|
Bulgarian transfer pricing requirements follow the OECD in general, but the country has yet to apply the hierarchy of methods abolishment, which was included in the OECD's 2010 rules. Rules at present also do not specifically address business restructuring.
"The market has not changed that much in the past year," said partner Valentine Savov, from Savov & Partners. "We see more instances of tax authorities challenging transfer pricing cases. There are more external experts providing their opinion on pricing, including some very high-value cases."
Within the Bulgarian TP market, like in most jurisdictions covered in World TP, BEPS actions and implementation are the 'hot topics'. BEPS will be turned into concrete legislation within the coming year, and Bulgaria signed the multilateral convention (MLI) in June 2017.
As a consequence, tax officials have started to develop their awareness of TP transactions when carrying out audits and checks.
The country has become an attractive location for outsourcing businesses across diverse sectors, predominantly within the areas of IT and communications.
"I think full compliance will continue as a trend," said Savov. "The world is getting smaller, tax authorities are gaining more information. Transfer pricing and compliance are the future of our professional services."
As a member state of the European Union, Bulgaria is obliged to implement country-by-country reporting (CbCR) into domestic legislation from 2017. This will affect companies with revenue of €750 million ($884 million) or more. The first year report will be prepared for the financial year of 2016 and must be submitted by December 31 2017 to the National Revenue Agency.
The aim of CbCR is to discourage multinationals from exploiting aspects of tax systems or differences between alternative systems, minimising tax liabilities. Legislation to implement public CbCR is also underway in the EU. Should reports of how much tax a company is paying in each jurisdiction in which it operates become public, as the EU proposes, companies will be subject to greater public scrutiny on their taxes than ever before.
National Revenue Agency
52 Dondukov Blvd
Tel: +359/2 9859 6801
(As of July 2017)
|Corporate income tax rate||10%|
|Capital gains tax rate||10%|
|Branch tax rate||10%|
|Dividends||0% to 5% (a)|
Branch remittance tax
Net operating losses (years)