Financial Crime World

Financial Crimes Definition in Bulgaria: Tax Avoidance, Evasion, and Money Laundering Take Center Stage

The Bulgarian government has outlined the definitions of various financial crimes, including tax avoidance, evasion, and money laundering, in an effort to combat financial fraud. These offenses are punishable by law and can result in severe penalties for individuals and corporations found guilty.

Tax Avoidance

A legal act that uses tax regimes to reduce one’s tax burden is considered a form of tax avoidance. However, if deemed illegal by the tax authorities or courts, it becomes a criminal offense.

  • Key characteristic: Using tax regimes to reduce tax burden
  • Punishment: Severe penalties for individuals and corporations found guilty

Tax Evasion

The intentional concealment of income from detection and collection by the tax authorities is defined as tax evasion. This offense can be committed by individuals and corporations alike.

  • Key characteristic: Intentional concealment of income
  • Punishment: Severe penalties for individuals and corporations found guilty

Money Laundering

Money laundering refers to acts that involve processing proceeds of crime to conceal their illegal origin and reintroduce them into the legal economy.

  • Key characteristic: Processing criminal proceeds to conceal illegal origin
  • Punishment: Severe penalties for individuals and corporations found guilty

Criminal Offenses

According to Article 259 of the Criminal Code, fraudulent creation of non-profit organizations for tax purposes is considered a criminal offense. This involves establishing an organization with no legitimate purpose, solely to obtain tax benefits or engage in prohibited activities.

  • Punishment: Severe penalties, including fines and imprisonment

Fraudulent tax evasion is another serious crime, punishable under Articles 255 and 255a of the Criminal Code. This includes:

  • Failing to file tax returns

  • Providing false information

  • Destroying accounting documents

  • Engaging in other fraudulent activities to avoid paying taxes

  • Punishment: Severe penalties, including fines and imprisonment

State Agency for National Security’s Financial Intelligence Directorate (FID-SANS)

The FID-SANS plays a crucial role in combating financial crimes by:

  • Analyzing notifications of money laundering and financing terrorism
  • Stopping suspicious transactions
  • Training obligated persons

Statistics on Tax Avoidance, Evasion, and Money Laundering in Bulgaria

In 2016 alone, the Tax Evasion Unit of the Commission for Withdrawal of Criminal Assets reported:

  • Over 2,811 cases investigated
  • 1,777 convictions
  • Over 1,707 seized financial means

Conclusion

The Bulgarian government’s efforts to combat financial crimes are crucial in maintaining economic stability and protecting taxpayers’ interests. By understanding the definitions and penalties associated with tax avoidance, evasion, and money laundering, individuals and corporations can avoid falling prey to these offenses and instead contribute to a transparent and fair financial system.