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June 2014 Bulgaria Investment climate and business opportunities

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Investments and economic relations Why invest in Bulgaria? Government incentives

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FDI Inflow: Source: Bulgarian National Bank In million euro Investments and economic relations

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FDI Inflow: Source: Bulgarian National Bank Investments and economic relations

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The role of Italy as a trade partner for Bulgaria: Investments and economic relations

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.. Bulgarian trade relations Why invest in Bulgaria?

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Political and business stability EU and NATO member Currency board Low budget deficit and government debt Low cost of doing business 10% corporate tax rate (0% in high unemployment areas) 10% personal income tax Lowest cost of labor within EU Favorable office rents and low cost of utilities Access to markets European Union / EFTA Russia Turkey / Middle East Educated and skilled workforce

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Real GDP Growth: Source: Eurostat Why invest in Bulgaria?

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Taxation in Bulgaria: Source: Worldwide - tax Country Income Tax (%)Social Security (%) VAT (%) CorporateIndividualEmployerEmployee Bulgaria10 17.9-18.512.920 Serbia1510-2016.9 20 Romania16 28.4516.524 Hungary10/191628.518.527 Czech Rep.1922341121 Poland1918/3222.1413.723 Turkey2015-35271518 Slovakia2319-2534.813.420 UK230-4513.81220 Italy27.523-43301021 Spain3024, 75-5229.96.3521 Germany 30-33 (effective) 14-4519.720.619 France33.335.5-41502019.6 Why invest in Bulgaria?

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Business costs in Bulgaria: Why invest in Bulgaria? LocationPrice Q1 2013, EUR/sq m/month Office prime rent in Sofia CBDClass A 10-12 Office prime rent in Sofia non CBDClass A 8 11 Office rent in SofiaClass B 5 8 Office prime rent in PlovdivClass A 4 - 6 Office prime rent in VarnaClass A 3 6 Office prime rent in BurgasClass A 3 - 5 Prime rent for contemporary industrial space3-5 Industrial construction Prime industrial and logistics, Sofia region EUR/sq m/350-450

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Business costs in Bulgaria: /GJ, 2013/kWh, 2013 Source: Eurostat Why invest in Bulgaria?

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Potential fields of collaboration Services: Transport and Logistics Information technologies Outsourcing of business processes Health and tourism related to healthy lifestyle Industry: Transport equipment and machine building Electronics and Electrical engineering Chemical industry Food and Agriculture Resources: Mineral bottled water Sea and winter resorts Balneology Why invest in Bulgaria?

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Government incentives

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Legal framework for investing in Bulgaria: Equal treatment of Bulgarian and foreign investors Thresholds of investments that need to be covered in order to apply for investment certificate Class A, B and Priority investment projects Business plan and several standard documents required

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Government incentives Investment incentives under the Investment Promotion Act: Acquiring state or municipal land without a tender procedure (investments Class A and B) Financial support for construction of technical infrastructure elements (only for class A) Acquiring state or municipal land without a tender procedure on a lower cost, but not lower than the price evaluation for tax purposes (Priority investments) Lower tax rate on changing the status of the acquired land (Priority investments)

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The incentives for class A and B could be: Shortened administrative procedures Reimbursement of labor costs paid by the employer Financial support of up to 25% of the entire costs for specific training of minimum 50 employees The incentives for Priority investment projects could be: All the incentives for Class A and B Financial grants of up to 50% for education and R&D projects; and up to 10% for manufacturing projects Government incentives Investment incentives under the Investment Promotion Act:

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Legal framework for investing in Bulgaria: Government incentives Tax incentives: 10 % corporate tax (flat rate) 0 % corporate tax in areas with high unemployment rate 10 % personal income tax rate (flat rate) VAT exempt for import of equipment for investment projects

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Thank you for your attention! Sofia 1000, 31 Aksakov Str. Phone: (+359 2) 985 5500 Fax: (+359 2) 980 1320 E-mail: iba@investbg.government.bg Web: www.investbg.government.bg