Us investors in bulgaria boost

A new agreement between the US and Bulgaria could lead to an influx of US investors…

US companies and US individuals investing in Bulgaria will soon pay lower taxes for doing business in the country. The tax reduction is included in the agreement between Bulgaria and the US for avoiding dual taxation. US President George W. Bush has sent a letter to the Senate, urging senators to ratify the agreement.

The US Senate's approval is the last formality before the agreement can enter into effect since the Bulgarian MPs already approved the document. The agreement for avoiding dual taxation provides for a five-percent interest and royalties' tax to be paid by Bulgarian firms to US companies. Copyrights can include distribution of books, movies, music and television shows as well as the use of trademarks.

New tax relief

Bulgarian companies will pay the same five-percent dividend tax to US shareholders. Bulgarian firms participating in US pension funds investing in Bulgaria, will also take advantage of the new tax relief measures since the interests and the dividends paid to those US pension funds will be tax exempt.

The pensions, the ex-spouse and child support given to US citizens residing in Bulgaria would not be taxed according to the Bulgarian Tax Law. The same is valid for the financial support received by Bulgarians residing in the US.

Bulgarian interns and students in the US will not be paying taxes on income lower than USD 9000 per year neither will they pay taxes on all amounts they receive from Bulgaria to pay their tuition fees and living expenses. However, Bulgarian students who work in the US only for the summer will continue to pay taxes according to the US Tax Law. Afterwards, however, the taxes paid in the US will be deducted from the tax they owe in Bulgaria.

Prevention of tax evasion

In addition, the agreement regulates the information exchange between taxation and investigating authorities in Bulgaria and USA, which will lead to the prevention of tax evasion for deals conducted between Bulgarian and US companies.

The preparation of the tax agreement precedes the upcoming visit of the Bulgarian Prime Minister Sergey Stanishev to the US from June 14 to June 18. Stanishev is scheduled to meet US President George W. Bush during the last day of his visit.