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Dec 17, 2007 16:37 EEST
December 17 (SeeNews) - Bulgaria's parliament on Monday decided to introduce a 10% flat income tax as of 2008, one of the lowest in Europe, aiming to attract more foreign investments and enhance business activity, state-run news agency BTA reported.
The flat tax rate replaces the EU newcomer's progressive personal income tax, which now varies from 20% for the lowest income bracket to 24% for the highest incomes. The chamber also cut dividend tax by two percentage points to five percent in a move expected to help increase return on investments and lure more foreign investors.
Bulgaria relies on foreign capital inflows to offset its swelling current account deficit, expected to rise to 20% of gross domestic product this year from 15.8% last year. The country cut corporate tax from 15% to 10% in January, also in a move aimed at attracting foreign investors.
Bulgaria is the fifth country in southeastern Europe to introduce a flat personal income tax rate, after its neighbours Serbia, Romania and Macedonia, and Montenegro. After introducing it Bulgaria will be the country with the lowest income tax rate in the region.
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