According to BICA, the Bulgarian state loses a total of BGN 10 bn per year from the grey sector

Georgi Velev

The Bulgarian state loses over BGN 10 bn from the grey economy, said yesterday Vassil Velev, Chairman of the Bulgarian Industrial Capital Association (BICA). According to him, over the last few years the informal sector has been steadily growing. According to the sociologist, Emilia Chengelova the share of the grey economy in the country varies between 50 and 70%. Possibly, even greater growth in some sectors might be expected.

According to BICA's study, the most critical situation with grey businesses is observed in construction, healthcare, tourism and the dairy industry. In some regions and certain sectors, shady businesses constitute more than 75% of the economy. The study was carried out under the project "Restriction and Prevention of the Grey Economy.'' It was funded with nearly BGN 10 mln under Operational Programme (OP) Human Resources.
The most common practices in the informal economy refer to non-reporting of part of the turnover, profit from the non-payment of VAT and non-issuance of financial documents, stated Chengelova. Employers and people think that the reason for the high proportion of the grey economy in Bulgaria is the lack of control on the part of the state.

Currently, the share of the grey economy in Bulgaria is several times higher than in other countries, said Deputy Minister of Labour and Social Policy Krassimir Popov. According to him, in the EU the share of the grey economy varies between 5 and 10%. At a time of economic and financial crisis, employers seek ways to reduce some of their costs, said Popov.

The largest share of the grey sector is in the cities of Burgas, Pleven and Gabrovo. In the cities of Sofia and Plovdiv, informal businesses constitute about 20 %, according to the study.