Property, motor insurance prices in Bulgaria could rise by 2%
Bulgaria's general insurance companies will pay a 2% tax on collected premiums plus a 10% tax on profits. Life insurance and permanent health insurance covers will not be imposed the additional tax, according to the latest proposal by the Ministry of Finance.
The proposal to introduce a tax on insurance premiums has been published on the ministry's website. The tax will be based on collected premiums, with companies only paying for received amounts for insurance policies signed on deferred payment.
Increasing taxes for the Bulgarian insurance market was one of 60 measures forged between the government, employers and unions in end-March aimed at jumpstarting the flagging economy. Under the initial proposal, the 10% tax on premiums had to be imposed on both general and life insurers but it was meant to replace the tax on profits. The Ministry of Finance estimated it would generate EUR 25 million in 2010 alone from the new tax.
However, the proposal sparked ferocious opposition from insurers, who claimed it did not place them on an even playing field with other businesses and was in breach of EU directives. They also warned against withdrawal of business and re-registration to other EU markets with more favorable taxation mechanisms. If approved, the bill should come into force from September 1.
