Corporate income tax is levied on the chargeable profits of companies resident in Bulgaria for tax purposes. Liable for corporate income tax are local legal entities, local entities that are not traders, local unincorporated companies and insurance funds established under the Social Security Code, foreign entities and unincorporated companies when conducting business in the country through a permanent establishment.
“Profit” is defined as the “positive financial result”. This indicates the possibility of a negative one, because before determining the taxable profit, the financial result must be converted towards reduction or increase. Moreover “permanent” and “temporary” differences, which are unrecognized for tax purposes expenses, should be taken into account, as well as the depreciable assets that are considered those whose value is equal to or greater than BGN 700 (350 EUR) or other lower value threshold chosen by the company.
It is also possible to be formed tax loss, if the company received a negative result, after conversion of the accounting result with all temporary and permanent tax differences. The company is entitled to deduct the tax loss within the next 5 years.
The rate of the corporate income tax in Bulgaria is 10% and the amount of tax is determined by multiplying the tax base by the rate. Every company shall submit an annual tax return and pay the amount of the corporate income tax by March 31st of the next year.
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