The Idea Behind

15 December 2010

Our daughter company BulgariCo (the largest integrated company formation, legal advice, tax advice and accounting practice in Bulgaria) has released a quick reference guide on the tax framework in Bulgaria.

You can download the guide here.

A High-tech Hit In The Core*

January 14th, 2011

10 September 2010

The news about the new factory of Quorus Venture for electric vehicles in Stara Zagora, Bulgaria has finally come to demonstrate that it is the right investment destination for such binding and long-term investments in innovative sectors of the economy carried out by serious and sophisticated investors. Quorus Venture is active in productions relatted to green technologies of the future, modern energy sources and development of machinery for new technologies for waste products.

This is the type of news that the Government should encourage and seek to generate itself. And if until now, Bulgaria was known for a number of cliched sector, with rapid return parasitic on the natural resources of the country monetizing power or massive subsidies, the country’s gradual return of smaller niche scenes of high technology and innovation is on the agenda.

The decision the factory of Quorus Venture to be located precisely in Bulgaria hardly be mainly due to grants for European programs. Anyway, they are cumbersome, difficult to absorb and lead to the loss of flexibility that is critical in today’s dynamic world.

This investment, mostly demonstrates expectations for a stable fiscal and financial environment, or simply – keeping the tax levels. It is assumed that the investor expects full support from local and central governments for smooth project execution without administrative and legal obstacles at any level.

The assembly of any high-tech machinery and equipment is a complex initiative, requiring impecable know-how and highly qualified personnel with high pay levels. Other things being equal this highly-qualified staff is cheeper to keep at the Bulgarian ten percent flat tax environment than in 40%+ in old Europe.

The project implies the existence of a pool of human resources and existing infrastructure, such as the high-tech city from our past should have.

With its key location, and free industrial sites Stara Zagora is a natural hub for this kind of high-tech industries. The region enjoys a growing population and a more dynamic economic activity compared to the average for the country.

Due to its exemplary role Quorus Venture project must be put under the personal nourishment of the highest level from the first sod until whenever needed. It must be used as an example of a new pattern of behavior and attitude of the Bulgarian state to the sector’s future.

The project is a serious signal that the country’s attractive tax environment should be maintained and will not be sacrificed for cheap and populist social considerations, even if this implies a serious reform of public spending.

NB: The corporate and personal tax burden in the country is flat at 10%.

01 September 2010, Cross News Agency

Chaos and red tape in Bulgaria’s regulations are believed to be a major obstacle to attracting large-scale foreign investments in renewable energy, according to analyst Zlatin Sarastov.

Sarastov, analyst from Amphora Capital, a Sofia-based consultancy, has argued, as cited by the Cross news agency, that the recently announced investment of Japanese company Toshiba in a Bulgarian solar plant should alert the Bulgarian government about the expectations of serious investors for predictability in state regulations in the sector.

In his words, the long period of return on investments and the price fluctuations of the equipment are combined with the lack of certainty and clarity with respect to the development of Bulgarian infrastructure and energy market regulations to chase away investors in renewable energy.

The current situation thus makes very likely delays in the putting into operation of the respective energy facilities and also creates conditions for blackmailing on part of state officials.

“While 2009 saw the realization of several relatively large renewable projects, 2010 is the year of the big wait. This was also caused by the irresponsible political rhetoric and mismanagement about the investors’ expectations. The messages coming from the state institutions were contradictory. The use of the word “moratorium” in past few months also did not help,” Sarastov believes.

In his words, this has generated suspicions that the “chaos” has been brought about deliberately in order to “preserve” the local potential for certain people and companies by chasing away large foreign investors.

“The Bulgarian Government, however, is running out of time. It urgently needs an improvement of its image as well as foreign investors and the respective income to the budget, and will be forced to do what it is necessary for that, and to be predictable. Against this backdrop, investors are standing still in expecting a validation of their plans by large and authoritative investors. The Toshiba investment has arrived at a time when it is most needed. Perhaps it will serve to dissipate the doubts of the others and to unclog the sector,” says the analyst.

He also points out that the capacity of the Bulgarian energy distribution infrastructure is limited, which means that investors should probably consider risking with a renewable energy project now in order to fit within that capacity.