Bulgaria signed an agreement with US for avoiding double taxation between the two countries.
The agreement was signed in February and will be valid from January 1 2008 after it is approved by Bulgarian Parliament and the US senate, Capital weekly reported.
Double taxation is a situation in which taxes have to be paid for the same income or financial transaction, which results from the differences between tax legislation in different countries.
Taxes that have to be paid for the same income stand in the way of American businesses wanting to operate in Bulgaria.
Double taxation also occurs when Bulgarian companies pay dividends to US shareholders. The dividends are taxed once in Bulgaria by seven per cent and afterwards in US, where the tax can reach up to 30 per cent. Personal income is taxed in a similar way.
The agreement between Bulgaria and US will reduce taxes on dividends and on author and licencе income. The agreement is expected to remove taxes on interests of financial institutions and a number of other taxes as well.
The avoidance of double taxation will boost direct participation of US companies and indviduals in Bulgarian companies, lawyer Todor Tabakov said.
It will also boost direct investments from US in production and trade. In the period from 1992 to 2006 direct investments from US amounted to $800 million which placed the country 8th among the biggest foreign investors.
The agreement was signed in February and will be valid from January 1 2008 after it is approved by Bulgarian Parliament and the US senate, Capital weekly reported.
Double taxation is a situation in which taxes have to be paid for the same income or financial transaction, which results from the differences between tax legislation in different countries.
Taxes that have to be paid for the same income stand in the way of American businesses wanting to operate in Bulgaria.
Double taxation also occurs when Bulgarian companies pay dividends to US shareholders. The dividends are taxed once in Bulgaria by seven per cent and afterwards in US, where the tax can reach up to 30 per cent. Personal income is taxed in a similar way.
The agreement between Bulgaria and US will reduce taxes on dividends and on author and licencе income. The agreement is expected to remove taxes on interests of financial institutions and a number of other taxes as well.
The avoidance of double taxation will boost direct participation of US companies and indviduals in Bulgarian companies, lawyer Todor Tabakov said.
It will also boost direct investments from US in production and trade. In the period from 1992 to 2006 direct investments from US amounted to $800 million which placed the country 8th among the biggest foreign investors.
