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Round Table: Corruption and Tax Compliance
On 18 October 2005 the Center for Study of Democracy and Coalition 2000 organized a round table to present the analytical report Corruption and Tax Compliance. Policy and Administration Challenges. The Deputy Minister of Interior, Mr. Boyko Kotzev, made the opening remarks and stated that the Ministry of Interior applies effectively the best practices of the EU countries in preventing corruption within the Ministry. According to preliminary data during the first nine months of 2005 the Ministry disclosed 677 abuses of official capacity and 76 cases of bribery.

The report presented at the round table analyses the mechanisms and premises for the different corruption practices in the tax administration. The main drive of corrupt pressure on the tax administration is avoidance of penalties or concealment of non-compliance. Most often subject to non-compliance is VAT. According to the General Tax Directorate VAT fraud related losses to the state budget amount to approximately 300 million BGN annually in recent years. Dr. Vasil Kirov, Director of the Financial Intelligence Agency stated that about 1/3 of money laundering cases reported to the Agency are related to VAT fraud. The major drivers for corruption according to tax officials are their low salary levels (43% of them have family incomes lower than 60% of their stated anticorruption minimum), the lack of strong professional ethics and the high level of personal discretion allowed for by the legislation. The report gives specific recommendations for improving the work of the tax administration and presents an Indicator Matrix of Anticorruption Effectiveness that describes the level and the incentives for tax-related corruption. This instrument could be used for the implementation and update of the anticorruption policy in Bulgaria.

The main discussants to the report were: Mr. Boyko Velikov, Chairman of the Parliamentary Anti-corruption Commission and Mr. Valentin Vidolov, Deputy Director of the General Tax Directorate.

Agenda of the round table
Presentation of Dr. Konstantin Pahsev, Senior Fellow, Economic Program, Center for the Study of Democracy (MS Power Point, 1.04 MB, in Bulgarian)
Download the report in PDF (757 KB)
Contents of the Report

Media coverage (in Bulgarian)
Corruption Indices of Coalition 2000 for Public Sector Employees
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