Domuschiev blasts BSP’s dividend tax hike for stifling growth

A prominent Bulgarian business leader attacked government tax proposals, arguing that doubling dividend levies will discourage entrepreneurship and innovation while producing minimal budget relief.

Kiril Domuschiev, who chairs the Confederation of Employers and Industrialists in Bulgaria, responded to Socialist lawmaker Dragomir Stoynev after the legislator defended higher dividend taxes as tools for combating underground economic activity. Domuschiev said no statistical relationship exists between dividend rates and informal commerce levels across Eastern European nations facing similar challenges. He added that shadow economy income typically avoids official documentation or flows through inflated executive compensation rather than through dividend channels subject to the proposed taxes. Revenue projections for 2025 estimate only 174 million leva from dividend taxes, demonstrating a limited impact on deficits that could exceed 8 billion leva, Domuschiev wrote.

Higher rates will discourage business owners from withdrawing funds to launch new ventures and will trap capital inside established companies instead of supporting risky startups, according to Domuschiev. He warned that Europe already suffers from protecting legacy industries rather than funding innovation, pointing out that Tesla alone holds three times the market value of the entire European automotive sector despite launching just 22 years ago.