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In October, BCNL was informed that the Ministry of Finance is planning to make amendments to several tax laws (Corporate Income Tax Law, Individuals Income Taxation Law and the Local Taxes and Fees Law) that will eliminate all tax benefits for donations to public benefit nonprofit organizations (PBOs). The proposed changes were later published on the website of the Ministry and publicized at different meetings and press-conferences.

The present tax system in Bulgaria allows companies to deduct donations made to PBOs amounting to 10 % of their profit. Individuals can deduct up to 5 % of their annual income for donations to NGOs. In addition, PBOs are exempted from the donations tax levied by each municipality which ranges between 5 and 10 % (depending on the decision of the local municipal council). The Ministry’s proposal would have lead to the elimination of the differentiated tax treatment of PBOs as compared to all other NGOs and in reality made the public benefit status under the Bulgarian NGO law absolutely useless. If the proposals were adopted the only benefit of registering an NGO as compared to a commercial company would have been the exemption from corporate tax on grants. On donations, however, there would have been a local tax and economic activity is taxed at the regular rate of 10 %.

In fact, the Ministry of Finance reaction used as its rationale a letter from the EU saying that Bulgaria treats unequally donations to local as compared to foreign (EU-based) NGOs and this violates the principle of equal treatment of the EU. In order to eliminate unequal treatment, our Ministry of Finance decided to eliminate all benefits for donations to NGOs.

As a response to the unfavorable proposals of the Ministry of Finance a group of non-profit organizations, including the Bulgarian Center for Not-for-Profit Law (BCNL), Bulgarian Donors’ Forum, Bulgarian Business Leaders Forum, Programme and Analytical Centre for European Law, Workshop for Civic Initiatives Foundation, Bulgarian Charities Aid Foundation, The Tulip Foundation, The Red House Center for Culture and Debate, Caritas – Bulgaria, and BAPID initiated at the end of October a Campaign for preservation the tax benefits for donations.

The group sent letters to the Bulgarian Government and Parliament, as well as to members of the European Parliament a letter with our statement and the rationale behind it. We organized meetings with media and the state institutions. Support was received by the European Foundation Center as well. As part of the campaign we officially requested NGOs to send letters of support to us and we launched an online petition at http://www.bgpetition.com/zapazvane-na-danuchnite-oblekchenia-za-darenia/index.html, where citizens can support the group’s demands. Until now more than 750 citizens and over 140 organizations had given their support for the campaign.

As a result of these efforts, the Ministry of Finance changed its initial proposals so the draft amendments put before the Parliament not only preserve the current tax regime for donations and donors to Bulgarian PBOs, but also allow for deduction of donations made to similar nonprofit organizations registered in other EU or European Economic Area countries.