Subject to Bulgarian corporate income tax are all Bulgarian companies and permanent establishments of foreign entities in Bulgaria, except for special purpose investment companies, licensed close-ended investment companies and collective investment schemes, authorised for public offering in Bulgaria.

The tax rate is 10%. The taxable result for corporate tax purposes is the financial result (as per the applicable accounting standards) adjusted with certain add-backs and deductions.

The tax adjustments relate to e.g. expenses not related to the business activities or not duly documented, expenses related to impairment of assets, provisions for liabilities, revaluation reserve in certain cases, and others.

The tax depreciation is computed on the basis of tax depreciation plans, which have to be prepared separately from accounting depreciation plans. Corporate tax depreciation rates vary from 4% to 50% depending on the nature of the asset. The tax depreciation method is the straight-line method.

Interest expenses may not be fully deductible if the debt/equity ratio of the company exceeds 3:1.

Generally, dividends distributed to resident companies are not considered as taxable income (except for dividends distributed by special purpose investment companies).

Certain expenses incurred by taxpayers may be subject to one-off taxation at 10 percent, as follows:

• social expenses provided in-kind to the employees;
• representative expenses;
• some expenses related to use of vehicles for management purposes;

The above expenses and the tax levied on them are tax deductible for the companies.

Tax losses can be carried forward over the following five consecutive years. Foreign source losses may be offset only against taxable profit from the same source. Relief is introduced with respect to EU/EEA source losses, which may be offset against other source profits in certain circumstances.

Corporate income tax returns are to be submitted and the tax due is to be paid by 31 March of the following year.

Advance payments are due monthly or quarterly on a basis determined by the law.

Tax incentives apply for production activities in high unemployment regions, as well as for agriculture, manufacturing industry, production activities, high technologies and infrastructure, under certain conditions.

Specific corporate income tax regimes apply to persons engaged in maritime commercial shipping, gambling businesses, and some others.

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