In a bid to give Bulgarian companies a much-needed breath of fresh air amidst the downturn, the National Revenue Agency (NRA) is seeking ways to soften the debt reschedule regime, Dnevnik has learnt.

The current regulation, which came into force in 2006, is very restrictive and practically inapplicable to some cash-strapped companies grappling against the crisis.

The ballooning government debt to private companies adds flames to the fire.

NRA’s intentions come against the backdrop of shrinking revenue as tax and social security receipts in January and February 2010 ended up 600 million leva shorter compared with the corresponding period of last year.

Furthermore, official individuals’ income and companies’ turnover has contracted by four billion leva, according to NRA chief Krassimir Stefanov, who told broadcaster bTV the figures were alarming.

On a mission to Bulgaria in 2009, experts of the International Monetary Fund (IMF) also criticised the stringent regime, saying debt reschedule is almost impossible, two NRA sources said. They explained the current ordinance has not been changed yet as it strictly follows EU requirements to avoid state aid.

Stefanov pointed out that tax authorities are trying to be flexible with respect to defaults and lend businesses a helping hand in a bid to ward off bankruptcies.

The Confederation of Employers and Industrialists in Bulgaria (CEIBG) has already referred the issue to the Ministry of Finance, said the group’s executive director Evgenii Ivanov.

"This is a strongly anti-crisis mechanism and at a time of crisis rules have to be changed. All eurozone countries are breaking the rules and so the [Bulgarian] government, even with IMF assistance, should come up with a way to amend the ordinance. No bank immediately rips debtors to shreds, the NRA should start thinking this way too," according to Ivanov.

Business organisations have estimated the state owes 700 million leva to construction companies.

The finance ministry expects that revenue will collapse by 1.5 billion leva for 2010 under the pessimistic scenario. The budget deficit will be three billion leva, or about five per cent of GDP.

Source: Dnevnik.bg