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EU Commission urges Bulgaria to improve tax collection, banking supervision

EU Commission urges Bulgaria to improve tax collection, banking supervision EU Commission headquarters in Brussels; Author: Radomir Ralev

SOFIA (Bulgaria), June 5 (SeeNews) - The European Commission said on Wednesday it has recommended to Bulgaria to improve tax collection and ensure stability in the banking sector through effective supervision, in compliance with the Stability and Growth Pact in 2019 and 2020.

Bulgaria should improve tax collection in areas such as fuel trading and labour activities by undertaking additional targeted measures in order to reduce the still large share of shadow economy in the country, the Commission said in country-specific recommendations, part of the European Semester 2019 Spring Package.

"Tax collection does not seem to be improving everywhere at the same pace. This is particularly the case for labour-related taxes and social security contributions and in some categories of excise taxes. There is also evidence that undeclared work and illicit trade in fuels remain a challenge," the Commission said.

According to the Commission, Bulgaria needs to improve banking and non-banking supervision and work on the successful enforcement of the Anti-Money Laundering framework. In order to achieve stability in the banking sector, Bulgaria must also promote adequate valuation of assets, including bank collateral as well as a functioning secondary market for non-performing loans.

"The risk of corruption needs to be better addressed, as it is a predicate offence to money laundering. The Bulgarian authorities will need to show concrete results and build a track record evidenced by final decisions in high level corruption cases. The use of financial investigation and financial profiling is limited," the Commission said.

Bulgaria is also advised to focus investment-related economic policy on research and innovation, transport and water, waste and energy infrastructure as well as strengthen employability by reinforcing skills, including digital skills.

"Young people might be more employable if the quality and effectiveness of traineeships and apprenticeships were improved. Moreover, the participation in upskilling and reskilling measures among the adult population is very low. Despite measures launched to encourage the development of digital skills, Bulgaria's level of basic digital skills (29% of individuals possess basic digital skills against an EU average of 57%) remains among the lowest in the EU.", the Commission noted.

Other recommendations to Bulgaria include upgrade of the state-owned enterprise corporate governance, improvement of the access to health services and increased investments in clean energy infrastructure.