Bulgaria is very attractive for foreign companies because of the low corporate and income taxes, participants in the Acquisitions in the region discussion, part of the Private Equity Investing in Bulgaria and Southwest Europe conference agreed. The event was held in Sofia yesterday.
With the flat rate and corporate tax at 10%, Bulgaria is a very attractive destination for EU businesses, especially in view of its accession to the EU.
A proposal for the abolishment of the 5% tax on dividends has also been made, Vladimir Karolev pointed out.
Bulgaria is one of the few countries where legislation permits the establishment of the so-called real estate investments trusts (REIT). Moreover, certain amendments permitting those companies to invest abroad are soon to be passed, which means we can expect a boom in the sector, Karolev added.
In his opinion, there is enough money in Bulgaria but the country lacks large private equity deals.
Bulgaria has certain advantages before other countries in the sectors of agriculture and tourism, which will continue to attract investors in the future. Another sector with a lot of potential is services (including health and financial services).
Maria Hesus San Pablo, CED investment director, said the service sector in Bulgaria is at a much lower level of development than the EU average.
On a macroeconomic level, Vladimir Karolev said there are no reasons for worries about the country's high trade deficit, as the export is mainly formed by capital expenditures, which will have a positive impact in the future.
He also said he expects the currency board to be sustained even after the country's accession to the Eurozone.
Borislav Fesechiev, member of Eurohold Bulgaria management board, said the stock exchange will not be a good place to raise capital this year because of the global financial crisis. This is why Eurohold is open to private equity partnerships on possible future acquisition deals.
He also pointed out return on investment projects in Bulgaria can go as high as 20-40%.
The value of acquisition deals in Central and Eastern Europe stood at 2 billion dollars in 2004, which went up to 6 billion dollars last year.