NEARLY HALF OF BULGARIAN COMPANIES OPERATE IN THE GREY SECTOR

Nearly half of Bulgarian companies operate in the grey sector, showed the results of the nationally representative sociological survey, conducted by the Bulgarian Industrial Capital Association among 3,500 workers and employees, between the age of 15 and 85. The grey economy in Bulgaria exceeds 40%, according to employers and this trend is expected to continue. According to workers and employees, the informal sector accounts for 48.6% and the population believes that its share is about 58%.

“Payments in cash, the evasion of full payment of taxes and insurances, unfair competition and no invoices are among the most common practises which put businesses in the informal sector,” said Dr Emilia Chengelova, sociologist at the association. The main factors which lead to the rising share of the grey economy are associated with the abdication of the State from its control functions, Government policy and the legal requirements imposed on businesses, legal loopholes, the inefficient judicial system and the high levels of corruption," added Chengelova.

Infrastructure, tourism, healthcare and milk production are the most strongly affected sectors. According to the information released, mechanical engineering and postal services are the two industries where shady businesses are just in the range of 10-15%. The percentage of illegally operating companies also varies in the different regions of the country. It is highest in the region of Montana, where the share of the informal economy reaches up to 62.5%, followed by the regions of Burgas with 61.3%, and Yambol with 61.1%. In the capital, the respective percentage is 41.3%, while the lowest share of the grey economy is in the region of Kardzhali - 34.2%.

Stefan Petranov, an expert from the Strategies and Planning department, said that the share of the grey economy in the country was expected to decline this year. The measures, taken by the Government obliging firms to report their actual turnover directly to the NRA will contribute to this process. Connecting the cash registers at all tank stations with the NRA is a step that will make companies to operate legally. “Moreover, by the end of September, all companies which are registered to pay VAT should undergo the same procedure,” added Petranov. He referred to other studies of international experts, according to which the grey economy in Bulgaria accounted for 30-35% of GDP.