VAT Cut

BULGARIA PLANS TO CUT VAT TO 16% BY 2013
Bulgaria's finance minister has announced that Value-Added Tax (VAT), which currently stands at 20%, could be cut to 16% by the end of the new center-right government in 2013.
“The value-added tax will be reduced by 2% in 2011 and by another 2% over the next two years,” Simeon Djankov said in an interview for Darik radio.
The statement comes ten days after the proposal for gradual VAT reduction, which has drawn mixed responses in the country.
The idea for reducing Value-Added Tax (VAT) in Bulgaria from its current 20 % rate by the end of 2010 was announced after Prime Minister Borisov's meeting with Israeli counterpart Benjamin Netanyahu, who made this recommendation as a measure to fight the financial crisis.
“This is not a bad idea, but we knew about it before Netanyahu told us,” Djankov added.
Bulgaria has the lowest personal and corporate income tax in the EU at 10%, which was introduced at the beginning of 2008, replacing the previous system, which combined several different tax rates - between 20 and 24%, depending on income.
After coming into office, the new Bulgarian government announced it plans to keep unchanged the flat income tax rate and cut the Value-Added Tax (VAT) from the current 20% to 18% in 2010 and by a further 2% by the end of the term of office of Prime Minister Boyko Borissov’s administration.
The country will apply in January this year to join the exchange-rate mechanism, the two-year currency stability test prior to euro adoption, and seek to switch to the common currency by 2013.

Uncle's Comment: Note the last point 2013 is the target date for the Euro.