BANKS TO REPLACE INTEREST YIELDS WITH PREMIUMS TO HELP CLIENTS AVERT THE NEW TAX

Bulgarian banks may come up with different solutions like trust management and premiums to replace deposit yields and help customers avert the new tax, bankers told 24 Chasa Daily, adding that the sector is exploring the options to prevent a run on the banks. According to industry insiders, t trust management contracts may even outperform deposits in terms of profitability, but their yields are considered capital gains and are therefore not subject to taxation.

Levon Hampartzoumian, chairman of the Association of Banks in Bulgaria (ABB), told the newspaper, there were completely legal options that could reduce the tax burden from 10% to 2%, but he was sketchy on the details as the tax itself lacked clear definition in the law.

Hampartzoumian spoke to Nova TV earlier that day, saying that banks did not participate in the decision-making process concerning the interest rates, and just applied them on behalf and at the expense of the government. He said some banks could face some issues introducing the tax, while others not, bearing in mind the differences in the utilized software. Mr. Hampartzoumian quoted a US Supreme Court ruling, whereby the jurisdiction said paying taxes was not among the patriotic obligations of US citizens and they had the right to find legal ways of reducing the burden. According to Mr. Hampartzoumian, Bulgarians should do the same.