Parliament Approves Tax Package at First Reading: Tax Relief for Families with Children Set to Increase, Food Vouchers Value to Rise; 33% Windfall Tax for Banks and other Sectors

Tax relief for families with children is set to increase, food vouchers will rise in value, and a 33% windfall tax will be introduced for banks, telecommunications companies, supermarket chains, insurers and currency exchange bureaux. These are among the proposed amendments to the tax legislation package, which has been approved by Parliament at first reading.

TAX RELIEF FOR FAMILIES WITH CHILDREN

1 child – 5,000 euros
2 children – 10,000 euros
3 or more children – 15,000 euros
Child with disability – 12,000 euros

The increase in tax relief for families with one or more children was the only tax bill to receive the support of all opposition parties.

The value of food vouchers is also set to increase to €200. However, there was disagreement over the 7% tax applied to amounts exceeding €102.26.

Debate over the proposed 33% windfall tax on certain economic sectors became heated, with opposition parties speaking out against the measure.

Vladislav Goranov – GERB-UDF: "I know why the government is proposing this measure. It is doing so because it faces certain fiscal problems, which are nothing new. However, using one-off revenues to finance permanent expenditure is not a prudent measure."

Ayten Sabri – Movement for Rights and Freedoms (MRF): "What matters is the message we send from this point onwards to investors, consumers and shareholders, because the introduction of extraordinary and selective taxes undermines the predictability of the tax environment."

Asen Vasilev – We Continue the Change (WCC): "In my view, it would be better to encourage investment rather than drain funds from sectors capable of making those investments through a windfall tax, sending them such a negative signal. The result will be a head-on collision with a wall and an economic recession."

Konstantin Prodanov – Chair of the Budget Committee: "The main part of your criticism concerned whether investment would decline if we imposed a windfall tax on these several sectors. First of all, let us point out that most of this €800 million comes from the banking sector, which already transfers around 35% to 45% of its profits abroad. It pays no tax on those profits, does not invest them in Bulgaria and, under EU directives, does not pay dividend tax on them either. These are not sums being invested in Bulgaria."

Martin Dimitrov – Democratic Bulgaria (DB): "There is a trend within the government towards imposing taxes on everything that moves and everything that does not move in the Bulgarian economy. I am concerned that this creates an incentive for affected companies not to reduce their prices, because if they do, they will pay proportionately more in profit tax."

Tsoncho Ganev – 'Vazrazhdane': "This is a loophole. Banks will immediately factor this tax into various fees, interest rates or any other services they provide, including cash withdrawals using a bank card at an ATM."

Konstantin Prodanov – Chair of the Budget Committee: "If we assume that banks could arbitrarily raise their interest rates or fees whenever they wanted, that would mean they were operating under a cartel agreement. This is an additional argument for why they should be subject to regulatory supervision."

The tax valuations of properties will also be increased in stages: by 30% in 2027, followed by a further 35% increase in each of 2028 and 2029.