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Duty-free trade-related smuggling of excise goods has been one of the most potent and sustainable sources of political corruption in Bulgaria for the last fifteen years. The operation of land border area outlets has been a major channel for flooding the Bulgarian market with tons of illegal cigarettes and alcohol and the sale of millions of gallons of excise-free petrol. The resulting profit, running into hundreds of millions each year, has been funding many a Bulgarian party and has become the foundation of untouchable political oligarchies.
The policy brief examines duty-free trade in Bulgaria in regard to turnover and tax revenue losses from the operation of the duty-free outlets. It also analyses the regulation of duty-free trade in Bulgaria which bears all the marks of a state capture. The brief presents possible courses of action towards reducing the negative effects of duty-free trade.