Large foreign businesses, similar to Bulgarian companies, are complaining about the value added tax (VAT) regime in Bulgaria.

This was unveiled after a series of meetings of the European Round Table (ERT) of industrialists with government officials in Sofia on March 15.

Representatives of Danone, Nestle, Renault, Solvay, Umicore, Unilever and other large companies discussed with ministers Bulgaria’s business climate and the country’s readiness to join the European Union (EU).

Most of the business people complained about the current VAT rate of 20 per cent, which they find too high. Other reasons for complaints included VAT accounts, red tape and bureaucracy.

VAT accounts were introduced in Bulgaria in 2001 for all VAT-registered companies. They are to be opened in any commercial bank and their holders use them to either receive or pay VAT on any deal. However, the opening of a VAT account is not mandatory.

The accounts were introduced for a number of reasons, but mainly to prevent VAT frauds and to enable the tax administration to reimburse the deductible VAT (which comes as a difference between purchases and sales).

Under the new VAT Bill, which is currently undergoing discussions after being drafted by the Finance Ministry, the VAT accounts will be scrapped. Parliament is expected to approve the bill and turn it into an act in April. However, it will be effected after Bulgaria joins the EU, no earlier than 2007.

Corruption and grey economy remain the main problems foreign companies operating in Bulgaria face, ERT Chair Baron Daniel Janssen said.

A country with economic indicators like Bulgaria should attract more foreign investment, Janssen said.

During the talks with the ERT members, Prime Minister Sergei Stanishev listed the measures undertaken so far to counter the negative developments in Bulgaria.

Political will for change is present and the process will continue after the issuing of the European Commission report on Bulgaria’s readiness to join the EU, Stanishev said.

The high trade deficit remains one of the main problems to Bulgaria’s economic development. Still, it does not pose a major threat as budget surplus and foreign investment counter its negative effects, the prime minister said.

Bulgaria’s Cabinet aims at improving the environment for investors and business development, Stanishev said. National policies will focus on limiting bureaucratic hindrances to business establishments and operations and on aiding foreign investment initiatives, he said.

Bulgaria will be a loyal member of the European Union and will honour its commitments, European Integration Minister Meglena Kouneva told the ERT delegation.

The date of January 1 2007 is important to Bulgaria because postponing its accession to the EU would be tantamount to punishment for the Bulgarian companies that have made efforts to meet the European criteria, Kouneva said.

“We will spare no effort and will continue to work in the areas pointed out to us by making critical remarks,” she said.