Corporate tax in Bulgaria: Aspects, terms and formation
Corporate tax in Bulgaria is a significant fiscal tool that impacts legal entities in the country. Understanding the procedures and deadlines for declaring and paying this tax is crucial for the financial stability of companies and compliance with legal requirements.
What is corporate tax?
Corporate tax in Bulgaria is a levy on the profits of legal entities. Currently, the applicable tax rate for corporate tax is 10%. This rate is applied to the profits of companies after deducting expenses that are allowable for tax purposes.
How is corporate tax formed and calculated?
The formation of corporate tax begins with calculating the tax base of the legal entity. This tax base represents the company’s actual profit, accounting for all income and expenses for tax purposes. The standard tax rate of 10% is then applied to the tax base to determine the amount of corporate tax.
Who pays corporate tax?
Corporate tax applies to all legal entities registered in Bulgaria that generate profits. This includes limited liability companies, joint-stock companies, and others such as:
– All local commercial companies (legal entities);
– Local legal entities that have acquired profits from non-commercial activities: leasing, non-profit organizations engaging in commercial activities;
– Foreign companies conducting commercial activities in Bulgaria;
– Local unincorporated companies;
– All foreign unincorporated companies.
Corporate tax covers:
– Profits of local legal entities;
– Profits of local legal entities not engaged in commercial activities, such as profits from leases of movable and immovable properties, transactions under Article 1 of the Commercial Law, etc.;
– Profits of foreign legal entities conducting business in Bulgaria;
– Profits from organizing gambling activities.
Tax base and rate in forming corporate tax
Corporate tax is formed on the taxable profit made in the respective tax period. According to the law, it covers one calendar year. The corporate tax rate is 10 per 100.
Deadlines for declaration and payment to the National Revenue Agency
Legal entities in Bulgaria must submit their corporate tax declaration by June 30th of the year following the reporting tax period. Following this declaration deadline, the payment of corporate tax is obligatory by June 30th. For newly established companies, the tax reporting period starts from the date of their creation and continues until the end of the current calendar year.
Failure to pay within these deadlines can lead to the accrual of late payment interest, imposition of fines, or other sanctions by the National Revenue Agency.
Complying with the correct deadlines and requirements for declaring and paying corporate tax is key to maintaining the good tax status of companies and avoiding potential negative consequences from tax authorities.
Knowledge of tax norms and rules is essential, so collaboration with tax consultants can be crucial for successfully managing the tax obligations of legal entities in Bulgaria.
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