The proposed excess-profits tax targets sectors that do not reinvest their profits in the Bulgarian economy, but instead distribute them as dividends to shareholders and foreign parent companies, Deputy Finance Minister Lyudmila Petkova said in response to journalists’ questions. She specified that the measure is one-off and will apply only in 2027.
Petkova took part in a high-level conference “Building Resilience Together: Bulgaria’s ESM Membership,” organized in Sofia by the Ministry of Finance and the ESM on Friday.
According to an analysis by the Ministry of Finance, the sectors targeted for taxation account for more than 60% of excess profits across all economic sectors. In some of them, profit growth over a six-year period exceeded 588%, Petkova noted.
According to her, these funds are not used to build new factories or create jobs, but are instead distributed as dividends. She added that, under a European directive, dividends paid to foreign parent companies are not subject to dividend tax.
When presenting proposals for amendments to the tax laws on September 23, the Ministry of Finance announced its intention to tax the 2027 excess profits of banks, insurance and reinsurance companies, retailers operating at least five food outlets, telecommunications companies, currency exchange offices; and payday-loan companies.
Petkova described the taxation of excess profits as an expression of a Europe-wide approach to economic solidarity. She recalled the measures introduced in 2022–2023, when, amid the energy crisis, restrictions were imposed on electricity-sales revenues and energy companies were taxed.
Asked why other sectors were not included, the deputy minister said that, according to the analysis, companies operating in areas such as agriculture and transport reinvest their profits, including when they generate excess profits.
The proposal also includes a safeguard against the unjustified reduction of taxable profits in 2027. It provides for a comparison between the ratio of earnings before interest and taxes and taxable profit. If there is a significant discrepancy, an adjustment will be applied for the purposes of the excess-profits tax, Petkova explained.
According to her, the measure targets profit reductions that are not justified by economic circumstances. She gave reductions in prices or fees as an example of an economically justified change, one that could also help curb inflation.
Regarding property tax assessments, Petkova said that a gradual update over three years is being proposed – by 30% in the first year and by 35% in each of the following two years.
The updated assessments will be used only to determine the property tax. For the calculation of the household waste fee, the tax assessment will remain at its 2026 level, she emphasized.
Some municipalities already apply the “polluter pays” principle and determine the fee based on the amount of waste generated. Municipalities that continue to use the tax assessment as the basis will apply its current value, the Deputy Minister explained.
Asked how the update would affect homeowners in Sofia, Petkova gave a personal example. According to her calculations, the property tax on her 75-square-meter apartment will increase by EUR 15 next year.
Excess Profits Tax Targets Sectors That Don’t Reinvest Profit in Bulgaria, Deputy Minister Says THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2026-09-25 08:17:30
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