Bulgaria Tops EU in Informal Economy

Bulgaria’s informal economy is the largest of any European Union country, over 30 per cent, according to a recent study.The study on the extent of the informal economy was conducted by the Bulgarian National Center Business.

According to European Commission data, the average size of the “shadow” economy in EU countries is between 15 and 17 per cent, ranging from 10 to 12 per cent in Germany and Denmark to nearly 30 per cent from the Gross Domestic Product, GDP, in Greece and Italy.

The shadow economy in Bulgaria is down in size on 2011, but only where goods are sold, while it remains very high in the service sector.

The sectors with the largest share of the shadow economy in Bulgaria are construction, tourism and health care, where it sometimes reaches 60 per cent of services offered.

Experts from the centre point out that in the health care sector, the shadow economy takes the form of corruption.

The lowest share of shadow economy was observed in the production of machinery and in postal services – about 10 per cent to 12 per cent.

Tax evasion and concealment of income are rare in big, particularly foreign, companies and involve mainly sectors where there is end consumption by individuals.

The study further reveals problems with public tender bids – not so much with offering bribes, but when formulating the criteria for competitions to determine the winning bidder.

In 2011, there was significant improvement in the collection of excise duty on alcoholic beverages and cigarettes.

This improvement is attributed to the mandate to connect electronically cash registers with the National Revenue Agency, NRA, along with checks from the Employment Agency for fake labour contracts and public pressure against the practice of concealing revenues.

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