Global Daily Tax News, IMF Sets Out Tax Recommendations For Bulgaria, (Oct 3, 2025)

The International Monetary Fund (IMF) has recommended tax increases for Bulgaria, the removal of fiscal stimulus measures, and increased funding into quality investments.

In its Article IV consultation for the nation, the IMF said, "Looking ahead, the focus should be on mobilizing additional revenues to meet rising needs in infrastructure, health, and education, and to help reduce inequalities."

The report recommends a "non-expansionary fiscal stance in 2026" to "cool the economy".

In terms of tax policy, the IMF has recommended that Bulgaria broaden the tax base, seek to improve VAT compliance, and look to increase revenues from property taxes and excise taxes. Advancing the increase of social security contributions, planned for 2027, would also strengthen the financial sustainability of the pension system, it added.

The IMF said: "Looking ahead, maintaining fiscal space amid rising spending pressures will require prudent policies and forward-looking reforms. While the overall risk of debt distress remains low, public debt is increasing, owing to sustained deficits and sizeable recapitalizations of state-owned enterprises (SOEs). Addressing spending pressures from aging, defense, infrastructure, and the energy transition will also require fiscal space."

The IMF said that Bulgarian authorities should continue to strengthen tax administration, including implementing enhanced audit and control procedures and compliance risk management.

In the medium term, more revenues could be raised by increasing tax rates for both personal and corporate income and moving to progressive income taxation, thereby reducing income inequality, the IMF concluded.