Offshore companies are not so illegal in Bulgaria yet – MAY BE

Offshore companies are not so illegal in Bulgaria yet – MAY BE

Companies registered in preferential tax regime jurisdictions or so-called “offshore companies” recently in Bulgaria are a synonym for something illegal – some even go further, calling them completely illegal.

The understanding that offshore companies are illegal, comes on the principle of the “Chinese Whispers.”

Here are two “small” confutations of this misunderstandings.

First: a part of these “illegal” companies are in USA jurisdiction – calling that country is sufficiently an eloquent response to mass opinion. Practically, with status in “tax haven”, are for example states like Delaware, United States Virgin Islands and Guam Island.

We can’t declare US Law for ‘Illegal’, can we.

Second: with on inquiry of the European Commission to Bulgaria have been ascertained irregularities in the legislative restricting of offshore companies for the participation and performance of some activities.

The result of this inquiry is drafting of a project of an Act for amendding and supplementing of the economic and financial relations with companies registered in preferential tax regime jurisdictions, persons associated with them and their real owners Act.

In the project drafted are removed some of the restrictions established for the offshore companies and were provided a numerous opportunities for the companies registered in preferential tax regime jurisdictions, so-called “offshore companies” Here are some of the opportunities provided:

  1. participation in theprocedure for obtaining a license for a credit institution;
  2. participation in theprocedure for obtaining a licensefor a insurance activities;
  3. participation in theprocedurefor obtaining a licenseto perform activitiesas a pension insurance company;
  4. participation in theprocedurefor obtaining a licenseto perform theservice or activityinMarkets Actin Financial Instruments;
  5. participation in theprocedurefor obtaining a licenseto perform activities such asoperation ofcollectiveinvestment schemesand other collective investment undertakings;
  6. participation in theprocedurefor obtaining a licenseto perform activitiesas a payment institution;
  7. establishment oracquisition of a participationinprofessionalsports clublicensedby the relevantFederation;
  8. Applying for priority investment projectsunder the Support of the Investments Act;
  9. participation in a procedure forthe provision ofmobile operator license, respectively acquisition of a sharein thatoperator;
  10. establishmentoracquisition of a shareina company applying foror has received alicensefor a radio and/ora television broadcaster;
  11. establishmentoracquisition of a shareina company, publisher of periodicalprinted matter;
  12. participationin public-private partnership;
  13. participationin a company with state or municipalparticipation;
  14. conclusion of contractswith the stateormunicipalities, as well as with state or municipalenterprisesand companiesand theirsubsidiary companieswithmore than 50per cent stateormunicipal share inthe capital;

The project was drafted, passed through public debate and now it is being expecting in it to be implemented the suggestions and comments received during the public consultation and interagency coordination.

After these actions, the project will be sent to the European Commission and, if approved reconciliation will be submitted to the National Assembly, after which the so-called “illegal companies” will become legal – may be.

Legal trainee at Zafirov&Co Law Office: Ivan Terziev

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