St. Bulgaria: Economy

Economy Profile: Bulgaria
Doing Business 2013
Bulgaria
2013 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org All rights reserved. 1 2 3 4 15 14 13 12 A copublication of The World Bank and the International Finance Corporation. This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions
This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://creativecommons.org/licenses/by/3.0. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: AttributionPlease cite the work as follows: World Bank. 2013. Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises. Washington, DC: World Bank Group. DOI: 10.1596/978-0-8213-9615-5. License: Creative Commons Attribution CC BY 3.0 TranslationsIf you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation . All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Additional copies of all 10 editions of Doing Business may be purchased at www.doingbusiness.org. Cover design: Corporate Visions, Inc.
Doing Business 2013
Bulgaria
CONTENTS
Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 5 Starting a business ..................................................................................................................... 14 Dealing with construction permits ........................................................................................... 23 Getting electricity ....................................................................................................................... 36 Registering property .................................................................................................................. 43 Getting credit .............................................................................................................................. 54 Protecting investors ................................................................................................................... 61 Paying taxes ................................................................................................................................ 70 Trading across borders .............................................................................................................. 78 Enforcing contracts .................................................................................................................... 87 Resolving insolvency .................................................................................................................. 97 Employing workers .................................................................................................................. 103 Data notes ................................................................................................................................. 110 Resources on the Doing Business website ............................................................................ 115
Doing Business 2013
Bulgaria
INTRODUCTION
Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers. In a series of annual reports Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 185 economies, from Afghanistan to Zimbabwe, over time. The data set covers 46 economies in SubSaharan Africa, 33 in Latin America and the Caribbean, 24 in East Asia and the Pacific, 24 in Eastern Europe and Central Asia, 19 in the Middle East and North Africa and 8 in South Asia, as well as 31 OECD highincome economies. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. This economy profile presents the Doing Business indicators for Bulgaria. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2012 (except for the paying taxes indicators, which cover the period JanuaryDecember 2011). The Doing Business methodology has limitations. Other areas important to businesssuch as an economys proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders and getting electricity), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutionsare not directly studied by Doing Business. The indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policy makers in designing regulatory reform. More information is available in the full report. Doing Business 2013 presents the indicators, analyzes their relationship with economic outcomes and presents business regulatory reforms. The data, along with information on ordering Doing Business 2013, are available on the Doing Business website at http://www.doingbusiness.org.
Doing Business 2013
Bulgaria
THE BUSINESS ENVIRONMENT

For policy makers trying to improve their economys regulatory environment for business, a good place to start is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing business based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size businesses through their life cycle. Economies are ranked from 1 to 185 by the ease of doing business index. For each economy the index is calculated as the ranking on the simple average of its percentile rankings on each of the 10 topics included in the index in Doing Business 2013: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The ranking on each topic is the simple average of the percentile rankings on its component indicators (see the data notes for more details). The employing workers indicators are not included in this years aggregate ease of doing business ranking, but the data are presented in this years economy profile. The aggregate ranking on the ease of doing business benchmarks each economys performance on the indicators against that of all other economies in the Doing Business sample (figure 1.1). While this ranking tells much about the business environment in an economy, it does not tell the whole story. The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business.
ECONOMY OVERVIEW
Region: Eastern Europe & Central Asia Income category: Upper middle income Population: 7,476,000 GNI per capita (US$): 6,550 DB2013 rank: 66 DB2012 rank: 64* Change in rank: -2
* DB2012 ranking shown is not last years published ranking but a comparable ranking for DB2012 that captures the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. See the data notes for sources and definitions.
Doing Business 2013
Bulgaria

Figure 1.1 Where economies stand in the global ranking on the ease of doing business
Source: Doing Business database.
Doing Business 2013
Bulgaria

For policy makers, knowing where their economy stands in the aggregate ranking on the ease of doing business is useful. Also useful is to know how it ranks relative to comparator economies and relative to the regional average (figure 1.2). The economys rankings on the topics included in the ease of doing business index provide another perspective (figure 1.3).
Figure 1.2 How Bulgaria and comparator economies rank on the ease of doing business
Doing Business 2013
Bulgaria

Figure 1.3 How Bulgaria ranks on Doing Business topics
Doing Business 2013
Bulgaria

Just as the overall ranking on the ease of doing business tells only part of the story, so do changes in that ranking. Yearly movements in rankings can provide some indication of changes in an economys regulatory environment for firms, but they are always relative. An economys ranking might change because of developments in other economies. An economy that implemented business regulation reforms may fail to rise in the rankings (or may even drop) if it is passed by others whose business regulation reforms had a more significant impact as measured by Doing Business. year Doing Business introduced the distance to frontier measure. This measure shows how far each economy is from the best performance achieved by any economy since 2005 on each indicator in 9 Doing Business indicator sets.
Comparing the measure for an economy at 2 points in time allows users to assess how much the economys regulatory environment as measured by Doing Business has changed over timehow far it has moved toward (or away from) the most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.4). The results may show that the pace of change varies widely Moreover, year-to-year changes in the overall rankings do across the areas measured. They also may show that an not reflect how the business regulatory environment in an economy is relatively close to the frontier in some areas economy has changed over timeor how it has changed and relatively far from it in others. in different areas. To aid in assessing such changes, last Figure 1.4 How far has Bulgaria come in the areas measured by Doing Business?
Note: The distance to frontier measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2005. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). The overall distance to frontier is the average of the distance to frontier in the 9 indicator sets shown in the figure. See the data notes for more details on the distance to frontier measure. Source: Doing Business database.
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The absolute values of the indicators tell another part of the story (table 1.1). The indicators, on their own or in comparison with the indicators of a good practice economy or those of comparator economies in the region, may reveal bottlenecks reflected in large numbers of procedures, long delays or high costs. Or they may reveal unexpected strengths in an area of business regulationsuch as a regulatory process that can be completed with a small number of procedures in a few days and at a low cost. Comparison of the economys indicators today with those in the previous year may show where substantial bottlenecks persist and where they are diminishing.
Table 1.1 Summary of Doing Business indicators for Bulgaria

Slovak Republic DB2013
Indicator
Starting a Business (rank) Procedures (number) Time (days) Cost (% of income per capita) Paid-in Min. Capital (% of income per capita) Dealing with Construction Permits (rank) Procedures (number) Time (days) Cost (% of income per capita)
57
48
140
146
52
124
68
83
New Zealand (1)
4 18 1.1
4 18 1.5
9 20 8.2
11 11 20.5
4 5 8.9
6 32 14.4
6 10 2.8
6 16 1.8
New Zealand (1)* New Zealand (1) Slovenia (0.0)
0.0
0.0
29.7
24.4
9.4
13.0
0.8
21.3
91 Economies (0.0)*
123
119
74
31
55
161
129
46
Hong Kong SAR, China (1) Hong Kong SAR, China (6)* Singapore (26) Qatar (1.1)
21 107 293.5
21 107 313.8
33 120 10.5
15 89 27.5
26 102 5.7
29 301 49.4
15 287 79.1
11 286 7.3
Best performer globally DB2013
Czech Republic DB2013
Romania DB2013
Hungary DB2013
Bulgaria DB2013
Bulgaria DB2012
Poland DB2013
Greece DB2013
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Indicator
Getting Electricity (rank) Procedures (number) Time (days) Cost (% of income per capita) Registering Property (rank) Procedures (number) Time (days) Cost (% of property value) Getting Credit (rank) Strength of legal rights index (0-10) Depth of credit information index (0-6) Public registry coverage (% of adults) Private bureau coverage (% of adults) Protecting Investors (rank) Extent of disclosure
128 6 130 340.7
125 6 130 366.6
143 6 279 180.0
59 6 62 62.4
109 5 252 116.9
137 6 186 208.3
168 7 223 584.2
100 5 158 249.1
Iceland (1) Germany (3)* Germany (17) Japan (0.0)
68
68
27
150
43
62
72
Georgia (1)
8 15 2.9 40 8
8 15 3.0 38 8
3 24 3.0 53 6
11 18 11.8 83 4
4 17 5.0 53 7
6 54 0.4 4 9
8 26 1.2 12 9
3 17 0.0 23 9
Georgia (1)* Portugal (1) Belarus (0.0)* United Kingdom (1)* Malaysia (10)*
United Kingdom (6)*
56.3
52.8
6.1
0.0
0.0
0.0
14.0
2.7
Portugal (90.7) United Kingdom (100.0)* New Zealand (1)
0.0
28.8
98.7
84.0
15.8
76.9
44.9
58.5
49 10
46 10
100 2
117 5
128 2
49 7
49 9
117 3
Hong Kong SAR,
Romania DB2013
Hungary DB2013
Bulgaria DB2013
Bulgaria DB2012
Poland DB2013
Greece DB2013
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Indicator
index (0-10) Extent of director liability index (0-10) Ease of shareholder suits index (0-10) Strength of investor protection index (0-10) Paying Taxes (rank) Payments (number per year) Time (hours per year) Trading Across Borders (rank) Documents to export (number) Time to export (days) Cost to export (US$ per container) Documents to import (number) Time to import (days) Cost to import (US$ per container)
China (10)*
Singapore (9)*
New Zealand (10)*
6.0
6.0
5.0
4.7
4.3
6.0
6.0
4.7
New Zealand (9.7) United Arab Emirates (1) Hong Kong SAR, China (3)* United Arab Emirates (12) Singapore (1)
91
83
120
56
118
114
136
100
15
15
12
18
41
20
454
500
413
202
277
286
216
207
93
95
68
62
73
50
72
98
5 21
5 21
4 16
5 19
6 17
5 17
5 12
6 17
France (2) Singapore (5)*
1,551
1,551
1,145
1,115
885
1,050
1,485
1,560
Malaysia (435)
6 17 1,626
6 17 1,666
7 17 1,180
6 15 1,135
7 19 875
5 16 1,025
6 13 1,495
7 17 1,540
France (2) Singapore (4) Malaysia (420)
Romania DB2013
Hungary DB2013
Bulgaria DB2013
Bulgaria DB2012
Poland DB2013
Greece DB2013
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Indicator
Enforcing Contracts (rank) Time (days) Cost (% of claim) Procedures (number) Resolving Insolvency (rank) Time (years) Cost (% of estate) Outcome (0 as piecemeal sale and 1 as going concern) Recovery rate (cents on the dollar)
86 564 23.8 39 93 3.3 9
88 564 23.8 39 94 3.3 9
79 611 33.0 27 34 3.2 17
87 819 14.4 39 50 2.0 9
16 395 15.0 35 70 2.0 15
56 685 19.0 33 37 3.0 15
60 512 28.9 32 102 3.3 11
69 545 30.0 32 38 4.0 18
Luxembourg (1) Singapore (150) Bhutan (0.1) Ireland (21)* Japan (1) Ireland (0.4) Singapore (1)*
31.7
31.4
56.3
44.5
38.8
54.5
29.2
53.6
Japan (92.8)
Note: DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. The ranking methodology for the paying taxes indicators changed in Doing Business 2013; see the data notes for details. For more information
on no practice marks, see the data notes. Data for the outcome of the resolving insolvency indicator are not available for DB2012.
* Two or more economies share the top ranking on this indicator. A number shown in place of an economys name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database.
Romania DB2013
Hungary DB2013
Bulgaria DB2013
Bulgaria DB2012
Poland DB2013
Greece DB2013
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STARTING A BUSINESS
Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government. What do the indicators cover? Doing Business measures the ease of starting a business in an economy by recording all procedures officially required or commonly done in practice by an entrepreneur to start up and formally operate an industrial or commercial businessas well as the time and cost required to complete these procedures. It also records the paid-in minimum capital that companies must deposit before registration (or within 3 months). The ranking on the ease of starting a business is the simple average of the percentile rankings on the 4 component indicators: procedures, time, cost and paid-in minimum capital requirement. To make the data comparable across economies, Doing Business uses several assumptions about the business and the procedures. It assumes that all information is readily available to the entrepreneur and that there has been no prior contact with officials. It also assumes that the entrepreneur will pay no bribes. And it assumes that the business: Is a limited liability company, located in the largest business city. Has between 10 and 50 employees. Conducts general commercial or industrial activities. WHAT THE STARTING A BUSINESS INDICATORS MEASURE Procedures to legally start and operate a company (number) Preregistration (for example, name verification or reservation, notarization) Registration in the economys largest business city Postregistration (for example, social security registration, company seal) Time required to complete each procedure (calendar days) Does not include time spent gathering information Each procedure starts on a separate day Procedure completed once final document is received No prior contact with officials Cost required to complete each procedure (% of income per capita) Official costs only, no bribes No professional fees unless services required by law Paid-in minimum capital (% of income per capita) Deposited in a bank or with a notary before registration (or within 3 months) Has a start-up capital of 10 times income per capita. Has a turnover of at least 100 times income per capita. Does not qualify for any special benefits. Does not own real estate. Is 100% domestically owned.
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STARTING A BUSINESS Where does the economy stand today?

What does it take to start a business in Bulgaria? According to data collected by Doing Business, starting a business there requires 4 procedures, takes 18 days, Figure 2.1 What it takes to start a business in Bulgaria Paid-in minimum capital (% of income per capita): 0.0 costs 1.1% of income per capita and requires paid-in minimum capital of 0.0% of income per capita (figure 2.1).
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
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STARTING A BUSINESS
Globally, Bulgaria stands at 57 in the ranking of 185 economies on the ease of starting a business (figure 2.2). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for an entrepreneur in Bulgaria to start a business.
Figure 2.2 How Bulgaria and comparator economies rank on the ease of starting a business
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STARTING A BUSINESS What are the changes over time?

While the most recent Doing Business data reflect how easy (or difficult) it is to start a business in Bulgaria today, data over time show which aspects of the process have changedand which have not (table 2.1). That can help identify where the potential for improvement is greatest.
Table 2.1 The ease of starting a business in Bulgaria over time By Doing Business report year Indicator Rank Procedures (number) Time (days) Cost (% of income per capita) Paid-in Min. Capital (% of income per capita) DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 .. 11 32 10.4 .. 11 32 10.3 .. 11 32 9.6 .. 9 32 7.9 .. 9 32 8.4 .. 4 49 2.0 .. 4 18 1.7 .. 4 18 1.6 48 4 18 1.5 57 4 18 1.1
86.7
81.6
73.0
63.9
56.3
47.8
20.7
0.0
0.0
0.0
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data correction s and the addition of 2 economies (Barbados and Malta) to the sample this year. Source: Doing Business database.
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STARTING A BUSINESS
Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the procedures, time, cost or paid-in minimum capital required to start a business (figure 2.3). These benchmarks help show what is possible in making it easier to start a business. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Figure 2.3 Has starting a business become easier over time? Procedures (number)
Time (days)
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STARTING A BUSINESS
Cost (% of income per capita)
Paid-in minimum capital (% of income per capita)
Note: Ninety-one economies globally have no paid-in minimum capital requirement. Source: Doing Business database.
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STARTING A BUSINESS
Economies around the world have taken steps making it easier to start a businessstreamlining procedures by setting up a one-stop shop, making procedures simpler or faster by introducing technology and reducing or eliminating minimum capital requirements. Many have undertaken business registration reforms in stagesand they often are part of a larger regulatory reform program. Among the benefits have been greater firm satisfaction and savings and more registered businesses, financial resources and job opportunities. What business registration reforms has Doing Business recorded in Bulgaria (table 2.2)?
Table 2.2 How has Bulgaria made starting a business easieror not? By Doing Business report year DB year DB2008 Reform No reform as measured by Doing Business. Commercial registration centralized electronic database was created consolidating and substantially reducing the number of registration procedures, and other registration formalities were cut. Bulgaria eased the process of business start-up by reducing the paid-in minimum capital requirement to 23.9% of income per capita and enhancing the efficiency at the company registry. Bulgaria eased business start-up by reducing the minimum capital requirement from 5,000 leva ($3,250) to 2 leva ($1.30). No reform as measured by Doing Business. Bulgaria made starting a business easier by reducing the cost of registration.
DB2009
DB2010
DB2011 DB2012 DB2013
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database.
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STARTING A BUSINESS What are the details?

Underlying the indicators shown in this chapter for Bulgaria is a set of specific proceduresthe bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new firm. These are identified by Doing Business through collaboration with relevant local professionals and the study of laws, regulations and publicly available information on business entry in that economy. Following is a detailed summary of those procedures, along with the associated time and cost. These procedures are those that apply to a company matching the standard assumptions (the standardized company) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). STANDARDIZED COMPANY City: Sofia Legal Form: Druzestvo s Ogranichena Otgovornost (OOD) Paid in Minimum Capital Requirement: BGN 2 Start-up Capital: 10 times GNI per capita
Summary of procedures for starting a business in Bulgariaand the time and cost
No. Procedure Execute the minutes of the constituent meeting of the shareholders in the ODD; obtain a notary certified statement of consent and signature specimen of the manager, and a certified copy of the articles of incorporation of the ODD. 1 The appointment of manager(s) is evidenced by a resolution passed by the constituent meeting of interest holders. The statement of consent and signature specimen is embodied into a single document, and notary certification of manager(s)' signature(s) is required. 1 day (30 min.) BGN 5 Time to complete Cost to complete
Deposit paid-up capital in a bank The capital-accruing bank account must be opened either by the company manager or by a person authorized by a notary-certified power of attorney. Those persons delegated authority over the bank account must provide a signature specimen in person or a notarycertified specimen. The amount of capital stays blocked in the bank account until the registry issues a decision on the company registration. The Commercial Act requires the minimum capital prescribed by law, i.e. BGN 2, to be paid-in prior to incorporation. After opening the escrow account and despositing the funds therein the company under incorporation is issued a certificate evidencing the shareholders' deposit of the capital. The certificate must be presented at the registry. Register with the Commercial Register at the Registry Agency 3 The registration is done using a Standard Application (A4 Form
1-2 days
BGN 10 -30 BGN (depending on the bank)
4 days
BGN 80 for electronic registratiion and BGN 110 for hard copy
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No.
Procedure "Application for registration of circumstances related to a limited liability company"). The following documents must be attached to the application: (1) Agreement of Association, (2) Resolution for appointment of manager(s), (3) Notary certified consent and signature specimen of manager(s), and (4) Bank certificate for deposited capital. The state fees are BGN 110 if the documents are filed with the Registry Agency on paper or BGN 80 if the registration documents are filed with the Registry Agency electronically.
Time to complete
Cost to complete application
Register for VAT The Value Added Tax Act (promulgated on August 4, 2006 in State Gazette issue 63) became effective on January 1, 2007 (Bulgaria's EU accession date). Under this new law, the company may voluntarily register for VAT purposes at any time, because the current threshold requirement has been abolished. A voluntarily registered person shall remain VAT-registered for 24 months starting from the beginning of the year following the year of VAT registration. The company must register for VAT purposes in Bulgaria if its turnover for 12 consecutive months exceeds BGN 50,000. Specific grounds for obligatory registration for VAT purposes apply when: A person from an EU member state who is not established in Bulgaria and provides taxable supplies of goods that are to be assembled or installed in Bulgaria by that person or at his or her expense (if the recipient is not registered for VAT in Bulgaria) A person from another EU member state supplies goods to Bulgaria exceeding total value of BGN 70,000 under the conditions of distance sales of goods within a given calendar year A person (whether resident or not) performs taxable intracommunity acquisitions in Bulgaria exceeding BGN 20,000 within a given calendar year A person (whether resident or not) receives supplies of services under chargeable supplies having place of performance on Bulgarian territory with respect to which the VAT is due by the recipient A Bulgarian resident performing supplies of services having place of supply the territory of another EU member state 1 day (filing), about 12 days for final registration
no charge
* Takes place simultaneously with another procedure. Source: Doing Business database.
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DEALING WITH CONSTRUCTION PERMITS

Regulation of construction is critical to protect the public. But it needs to be efficient, to avoid excessive constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in time and money, many builders opt out. They may pay bribes to pass inspections or simply build illegally, leading to hazardous construction that puts public safety at risk. Where compliance is simple, straightforward and inexpensive, everyone is better off. What do the indicators cover? Doing Business records the procedures, time and cost for a business to obtain all the necessary approvals to build a simple commercial warehouse in the economys largest business city, connect it to basic utilities and register the property so that it can be used as collateral or transferred to another entity. The ranking on the ease of dealing with construction permits is the simple average of the percentile rankings on its component indicators: procedures, time and cost. To make the data comparable across economies, Doing Business uses several assumptions about the business and the warehouse, including the utility connections. The business: Is a limited liability company operating in the construction business and located in the largest business city. Is domestically owned and operated. Has 60 builders and other employees. WHAT THE DEALING WITH CONSTRUCTION PERMITS INDICATORS MEASURE Procedures to legally build a warehouse (number) Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates Completing all required notifications and receiving all necessary inspections Obtaining utility connections for water, sewerage and a fixed telephone line Registering the warehouse after its completion (if required for use as collateral or for transfer of the warehouse) Time required to complete each procedure (calendar days) Does not include time spent gathering information Each procedure starts on a separate day Procedure completed once final document is received No prior contact with officials Cost required to complete each procedure (% of income per capita) Official costs only, no bribes Will be connected to water, sewerage (sewage system, septic tank or their equivalent) and a fixed telephone line. The connection to each utility network will be 10 meters (32 feet, 10 inches) long. Will be used for general storage, such as of books or stationery (not for goods requiring special conditions). Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).
The warehouse: Is a new construction (there was no previous construction on the land). Has complete architectural and technical plans prepared by a licensed architect.
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DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today?
What does it take to comply with the formalities to build a warehouse in Bulgaria? According to data collected by Doing Business, dealing with construction permits there requires 21 procedures, takes 107 days and costs 293.5% of income per capita (figure 3.1).
Figure 3.1 What it takes to comply with formalities to build a warehouse in Bulgaria
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
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Globally, Bulgaria stands at 123 in the ranking of 185 economies on the ease of dealing with construction permits (figure 3.2). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for an entrepreneur in Bulgaria to legally build a warehouse.
Figure 3.2 How Bulgaria and comparator economies rank on the ease of dealing with construction permits
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DEALING WITH CONSTRUCTION PERMITS What are the changes over time?
While the most recent Doing Business data reflect how easy (or difficult) it is to deal with construction permits in Bulgaria today, data over time show which aspects of the process have changedand which have not (table 3.1). That can help identify where the potential for improvement is greatest.
Table 3.1 The ease of dealing with construction permits in Bulgaria over time By Doing Business report year Indicator Rank Procedures (number) Time (days) Cost (% of income per capita) DB2006 .. 17 95 279.0 DB2007 .. 17 95 244.5 DB2008 .. 19 99 340.9 DB2009 .. 21 107 358.4 DB2010 .. 21 107 319.4 DB2011 .. 21 107 323.6 DB2012 119 21 107 313.8 DB2013 123 21 107 293.5
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. For more information on no practice marks, see the data notes. Source: Doing Business database.
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27

Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the procedures, time or cost required to deal with construction permits (figure 3.3). These benchmarks help show what is possible in making it easier to deal with construction permits. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Figure 3.3 Has dealing with construction permits become easier over time? Procedures (number)
Time (days)
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Cost (% of income per capita)
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29

Smart regulation ensures that standards are met while making compliance easy and accessible to all. Coherent and transparent rules, efficient processes and adequate allocation of resources are especially important in sectors where safety is at stake. Construction is one of them. In an effort to ensure building safety while keeping compliance costs reasonable, governments around the world have worked on consolidating permitting requirements. What construction permitting reforms has Doing Business recorded in Bulgaria (table 3.2)?
Table 3.2 How has Bulgaria made dealing with construction permits easieror not? By Doing Business report year DB year DB2008 Reform Bulgaria made obtaining a construction permit clearer by adopting new legislations. Bulgaria made obtaining a construction permit more complicated by increasing the fees, time and procedures for obtaining approvals of construction related procedures. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business.
DB2009 DB2010 DB2011 DB2012 DB2013
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DEALING WITH CONSTRUCTION PERMITS What are the details?

The indicators reported here for Bulgaria are based on a set of specific proceduresthe steps that a company must complete to legally build a warehouseidentified by Doing Business through information collected from experts in construction licensing, including architects, construction lawyers, construction firms, utility service providers and public officials who deal with building regulations. These procedures are those that apply to a company and structure matching the standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). BUILDING A WAREHOUSE City : Estimated Warehouse Value : Sofia BGN 780,000
The procedures, along with the associated time and cost, are summarized below.
Summary of procedures for dealing with construction permits in Bulgaria and the time and cost
No. Procedure Apply and obtain the design permit from the chief architect of the municipality To obtain the design permit, BuildCo must submit an application form, a title of property or proof of ownership, a sketch of the acting regulation plan, and a change proposal with tax receipts. The time limit for obtaining the design permit is 14 days, according to the Law of the Spatial Planning (Article 140). The design permit fees are set according to Decision No 894, Protocol No 93 (dated November 23, 2006) of the Sofia Municipal Council, Addendum 4, Article 2, as shown below. Fee schedule for design permit request: Residential buildings: BGN 40.00 Nonresidential buildings: BGN 150.00 As of January 2009, the design visa can be obtained in fast track option. For nonresidential buildings it will cost BGN 300.00. The documents required for issuance of a designing visa are: an application form, a title of ownership and a tax receipt. Time to complete Cost to complete
3 days
BGN 300
* Sign preliminary contracts with the water authorities to connect to the water supply networks and obtain this connection In principle, BuildCo must obtain approval from the water authorities. The approval is valid for a year. Several documents are necessary to obtain this approval, including proof of ownership, the plan, the application form, the design permit, and the investment design by the municipals chief architect. Because this procedure is carried out simultaneously with Procedure 2, the filing is submitted at the same time. On these grounds, the water company undertakes a preliminary
20 days
BGN 162
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No.
Procedure survey and subsequently issues a report that contains the necessary technical data and the specifications for the network connection. As of January 2009 the Water Company operating on the territory of Sofia has a new pricelist for the services provided. The fee amounting at BGN 162.00 is payable in regard with the issuance of a report containing the technical data and specifications of the water network connection. The expedited procedure is not effective anymore. It takes on average 20 days to complete this procedure. * On-site inspection from water authorities
Time to complete
Cost to complete
3 Obtain preliminary survey from Telecom provider 4 Apply for the approval for the investment design with the Chief Architect of the Municipality The approval of the investment design is the basis for issuing a construction permit. As of January 2009, after amendment of the Decision No 894, the fees for the approval of the investment design are BGN 0.20 per sq. m. for the nonresidential buildings. The procedure for the construction permit may be completed at the same time and within 7 days if the investment designs are grounds for issuing permission for construction. A respective request must be included in the application for coordination. However, many opt for separate procedures * Request and obtain preliminary assessment of the building for its compliance with energy efficiency requirements from licensed company Every investment project for construction, reconstruction and modernization, on the basis of which permission for construction is granted, has to be assessed for its compliance with the energy efficiency requirements. There is no a fixed price for the issuance of a certificate for energy effectiveness. The rates are subject of negotiation and vary between BGN 1.00 -- BGN 1.50 per sq. m. The assessment is done by a privately licensed company. * Obtain approval of the Investment project design from the Fire department The fee for this procedure is equal to 50% of the cost of the certificate for fire safety issued after the completion of the construction. The latter depends on the construction category that the fire department has classified the warehouse. As of the Law of the Ministry of Interior (title amend.) SG 86/00: as of Article 31, Point 3a, Tariff No. 4), the fee formula for warehouses, industrial buildings and premises, and external
1 day
no charge
15 days
no charge
30 days
BGN 260
2 days
BGN 2,601
30 days
BGN 450
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No.
Procedure facilities classified as a fire hazard "A" and "B" is BGN 250.00 plus BGN 0.50 per sq. m. As of May 4, 2007 fire safety procedures have been streamlined by an Order On Conduction Fire Safety Measures. The Order does not stipulate any new requirements regarding the construction process. However, the Order explicitly enumerates the attachments that have to be submitted together with the application in order to obtain a Certificate for Fire Safety. The validity of Certificate has been extended to 3 years. The procedure must be completed within 14 days. However in practice it still takes on average one month. * Obtain decision on the need of environmental impact assessment from the Director of the Regional Inspectorate of Environment and Water The Law on Environment Protection (Appendix 1 and Appendix 2) defines the investment projects subject to an environmental impact assessment (EIA). The warehouse building for storing books and stationary does not fall among the investment projects listed in both appendices. Thus, the EIA is not obligatory. However, a decision issued by the Director of the Regional Inspectorate of Protection of Environment is required to confirm that EIA is not necessary. The decision is issued within 30 days of submitting the request and paying BGN 290.00. The decision is valid for 5 years. * Obtain approval of the Investment project design from a Hygiene Epidemiological Expert Required documents for the issuance of a hygiene certificate are a request form, a permit for designing, approval letters from water and electricity authority, expert opinion from the regional sanitary inspector, and other project documents. The hygiene epidemiological experts fees for consulting services are BGN 4.50 per hour. The overall cost of the approval is based on two criteria the number of experts involved in the inspection and billable hours. * Request the chief architect of the municipality to issue the Permission for Construction After the investment design has been approved, the permission for construction is issued within 7 days of the formal application being received. Both steps could be performed simultaneously if required in the application. The fees are BGN 9.00 per sq. m., according to Decision No 894, Protocol No. 93 (dated November 23, 2006, and amended in February 5, 2008) of the Sofia Municipal Council, Addendum 4, Table 1, assuming suburban Zone V. Sign a contract with a surveillance company BuildCo should sign a contract with an independent construction supervision firm. This supervisor must be licensed by the Ministry of Regional Development and Public Works. The supervisor will sign all acts and records during construction. The firms instructions and orders are binding for BuildCo and the technical manager. Within 3 days of
Time to complete
Cost to complete
30 days
BGN 290
25 days
BGN 70
10
7 days
BGN 11,705
11
5 days
BGN 10,405
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No.
Procedure being issued, objections against supervisory firms instructions can be made before the Directorate for National Construction Control. Construction will be stopped until a decision is reached, and the decision is considered to be a new set of binding rules. The supervisor must notify the Regional Directorate for National Construction control of any irregularities within 3 days of detection. The supervisor will be responsible for damages caused to the assignor and to the other participants in the construction, and jointly responsible with BuildCo for damages caused by not complying with the technical rules and the approved designs. The supervision contract must be valid for the entire construction process. The rates for a contract are between BGN 6.00 and BGN 10.00 per sq. m. of built area. However, the cost for this procedure is subject to negotiation between the investor and the surveillance company. There is no legally regulated minimum cost, but the Bulgarian Association of Architects and Engineers has issued an act containing recommended fees. The fees depend on the value of the construction work but may not be less than BGN 800.00. After the end of the construction, the person exercising construction supervision will prepare a final report to the assignor. Map the building on the cadastre The Cadastre Agency issues a document after the building has been mapped. As of June 2007 the procedure can be done in fast track option in 4 hours for BGN 30.00. The fee is collected in the system of the Ministry of Regional Development and Public Works, according to Article 42, Paragraph 1, of the Tariff 14 promulgated SG No.94/1998. As of March 2006 the Agency authorized to map the building on the cadastre is under the name of Agency for Geodesy, Cartography and Cadastre. The amendment is made by 7, item 1 of the Law of the Geodesy and Cartography. Sign contract with water provider and receive connection
Time to complete
Cost to complete
12
1 day
BGN 30
13
The decision is valid for 3 years, according to the order of the environmental protection law. * Sign contract with telephone provider and receive connection
10 days
BGN 300
14 Obtain Fire Safety certificate The fee for issuing fire certificates for buildings and premises with industrial purpose, warehouses, and external facilities with fire hazard category "A" and "B" is BGN 250.00 plus BGN 0.50 per sq. m. This fee is set according to Tariff No. 4 for the Charges Collected Within the System of the Interior Ministry, Under the Law of the State Fees, Article 3a (amend. SG 21/07). The construction surveillance files a report on the completed construction
10 days
BGN 70
15
1 day
BGN 900
16
1 day
no charge
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No.
Procedure After the construction is finished, the assignor, the designer, the constructor, and the supervisor, must issue a document confirming that the construction has been carried out in accordance with the approved designs, the certified executive documentation, the requirements of the construction and the conditions of the contract. The records for conducted trials on the machines and on the facilities should also be attached. The transfer of the construction by the constructor to the assignor is also implemented. A technical passport is registered with the Chief Architect of the Municipality The Law on Spatial Development was supplemented on September 15, 2006, State Gazette, Issue No. 76. The law contains a new requirement for licensed experts performing surveillance control. A technical passport for the construction should be prepared after the completion of construction. This document defines all terms for the performance of any major or current repairs and contains data on all certificates issued (those required by the construction legislation).
Time to complete
Cost to complete
17 Inspections should also be recorded in the passport. The technical passport must be prepared by the surveillance company. Either the surveillance company or the investor files two copies of the technical passport (one for the investor and one for the chief architect of the municipality) and an electronic copy with the Chief Architect of the Municipality, Office for Registration. The registration of the technical passport may take 2 or 3 days (no charge) after which the investor or the surveillance company may take back their original (it should bear a stamp with the date and the registration number). A copy of the registered technical passport is filed with the Cadastre Agency A copy of the registered original technical passport (notarization not required), along with the original technical passport, should be filed with the Cadastre Agency (this second procedure costs BGN 2.00 and is completed in a day). The copy is to be kept by the Cadastre Agency, while the original (with a stamped registration number) is returned to the investor. Request and obtain certificate for energy efficiency After completing a new construction a certificate for energy efficiency (energy passport) has to be issued, which is a part of the technical passport of the construction. The issuance of the certificate is performed under a contract signed by the assignor and natural person/entity, entered in the Register for the persons authorized to perform certification for energy efficiency. Receive inspection by the municipality 20 A state commission coordinated by national Construction Control Department grants final approval of the building construction. The commission is comprised of members from different authorities, including the Hygienic Epidemiological Institute and the Fire Alarm
3 days
no charge
18
1 day
BGN 2
19
7 days
no charge
1 day
no charge
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No.
Procedure Security Service. The municipality issues the approval of the building
Time to complete
Cost to complete
After finishing the construction and tests of facilities, to obtain an occupancy permit, the assignor must register before the Chief Architect 21 of the Municipality, present the ultimate report, the utility provider contracts, and document from the cadastral agency that its requirement has been fulfilled. In 7 days, the municipality issues the occupancy permit. * Takes place simultaneously with another procedure. Source: Doing Business database.
7 days
BGN 750
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GETTING ELECTRICITY
Access to reliable and affordable electricity is vital for businesses. To counter weak electricity supply, many firms in developing economies have to rely on self-supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for a customer is always to gain access by obtaining a connection. What do the indicators cover? Doing Business records all procedures required for a local business to obtain a permanent electricity connection and supply for a standardized warehouse, as well as the time and cost to complete them. These procedures include applications and contracts with electricity utilities, clearances from other agencies and the external and final connection works. The ranking on the ease of getting electricity is the simple average of the percentile rankings on its component indicators: procedures, time and cost. To make the data comparable across economies, several assumptions are used. The warehouse: Is located in the economys largest business city, in an area where other warehouses are located. Is not in a special economic zone where the connection would be eligible for subsidization or faster service. Has road access. The connection works involve the crossing of a road or roads but are carried out on public land. Is a new construction being connected to electricity for the first time. Has 2 stories, both above ground, with a total surface of about 1,300.6 square meters (14,000 square feet), and is built on a plot of 929 square meters (10,000 square feet). WHAT THE GETTING ELECTRICITY INDICATORS MEASURE Procedures to obtain an electricity connection (number) Submitting all relevant documents and obtaining all necessary clearances and permits Completing all required notifications and receiving all necessary inspections Obtaining external installation works and possibly purchasing material for these works Concluding any necessary supply contract and obtaining final supply Time required to complete each procedure (calendar days) Is at least 1 calendar day Each procedure starts on a separate day Does not include time spent gathering information Reflects the time spent in practice, with little follow-up and no prior contact with officials Cost required to complete each procedure (% of income per capita) Official costs only, no bribes Excludes value added tax Is 150 meters long. Is to either the low-voltage or the mediumvoltage distribution network and either overhead or underground, whichever is more common in the economy and in the area where the warehouse is located. The length of any connection in the customers private domain is negligible. Involves installing one electricity meter. The monthly electricity consumption will be 0.07 gigawatt-hour (GWh). The internal electrical wiring has been completed.
The electricity connection: Is a 3-phase, 4-wire Y, 140-kilovolt-ampere (kVA) (subscribed capacity) connection.
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GETTING ELECTRICITY Where does the economy stand today?

What does it take to obtain a new electricity connection in Bulgaria? According to data collected by Doing Business, getting electricity there requires 6 procedures, takes 130 days and costs 340.7% of income per capita (figure 4.1).
Figure 4.1 What it takes to obtain an electricity connection in Bulgaria
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
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GETTING ELECTRICITY
Globally, Bulgaria stands at 128 in the ranking of 185 economies on the ease of getting electricity (figure 4.2). The rankings for comparator economies and the regional average ranking provide another perspective in assessing how easy it is for an entrepreneur in Bulgaria to connect a warehouse to electricity.
Figure 4.2 How Bulgaria and comparator economies rank on the ease of getting electricity
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GETTING ELECTRICITY
Even more helpful than rankings on the ease of getting electricity may be the indicators underlying those rankings (table 4.1). And regional and global best Table 4.1 The ease of getting electricity in Bulgaria performers on these indicators may provide useful benchmarks.
Indicator
Bulgaria DB2013
Bulgaria DB2012
Best performer in Eastern Europe & Central Asia DB2013
Rank Procedures (number) Time (days) Cost (% of income per capita)
128 6 130 340.7
125 6 130 366.6
Georgia (50) Georgia (4) Kosovo (48) Lithuania (55.4)
Iceland (1) Germany (3)* Germany (17) Japan (0.0)
Note: DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. * Two or more economies share the top ranking on this indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database.
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GETTING ELECTRICITY
Obtaining an electricity connection is essential to enable a business to conduct its most basic operations. In many economies the connection process is complicated by the multiple laws and regulations involvedcovering service quality, general safety, technical standards, procurement practices and internal wiring installations. In an effort to ensure safety in the connection process while keeping connection costs reasonable, governments around the world have worked to consolidate requirements for obtaining an electricity connection. What reforms in getting electricity has Doing Business recorded in Bulgaria (table 4.2)?
Table 4.2 How has Bulgaria made getting electricity easieror not? By Doing Business report year DB year DB2012 DB2013 Reform No reform as measured by Doing Business. No reform as measured by Doing Business.
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GETTING ELECTRICITY What are the details?

The indicators reported here for Bulgaria are based on a set of specific proceduresthe steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution utilityidentified by Doing Business. Data are collected from the distribution utility, then completed and verified by electricity regulatory agencies and independent professionals such as electrical engineers, electrical contractors and construction companies. The electricity distribution utility surveyed is the one serving the area (or areas) in which warehouses are located. If there is a choice of distribution utilities, the one serving the largest number of customers is selected. OBTAINING AN ELECTRICITY CONNECTION City: Name of Utility:
Sofia
CEZ Distribution Bulgaria AD The procedures are those that apply to a warehouse and electricity connection matching the standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). The procedures, along with the associated time and cost, are summarized below.
Summary of procedures for getting electricity in Bulgariaand the time and cost
No. Procedure Submit application for preliminary contract with CEZ Distribution Bulgaria and await estimate An application cannot be submitted online because it needs to be signed. The application is submitted in one of the client centers of CEZ Distribution Bulgaria JSC. The following documents should be submitted with the application: Visa for exploration (this is an excerpt from the acting detailed development plan) Documents proving rights of ownership (if needed) Power of Attorney of the person submitting the application on behalf of the company Company documents - Court decision for registration BULSTAT and other documents All documents except the visa for exploration need notarization. After depositing the application the customer has to wait for the estimate. The estimate is a preliminary contract that states the conditions for connection and how the site will be connected. Receive preliminary contract and prepare design of connection works 2 After receiving the estimate (utility checks and prescribes the technical way/possibility for connection) and based on that estimate, the customer has to design the external connections. The customer would usually hire an electrical design firm for this. The design has to be coordinated with other agencies. 24 calendar days BGN 1,500.0 Time to complete Cost to complete
30 calendar days
BGN 211.9
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No.
Procedure Submit application for conclusion of contract with CEZ Distribution Bulgaria and await final contract and approval of design Once the estimate is received, the customer should submit an application for the conclusion of the contract, accompanied with all documents in accordance with the Ordinance 6 for connection of producers and customers of electricity to the distribution network. The design for the external connection has to be included in this application because the utility has to approve it. The internal wiring of the warehouse is assessed by the contractor who is managing the overall warehouse project. The assessment of the internal wiring has to be submitted with this application. Purchase material The utility can buy and provide the material, however most of the customers choose to buy the material on the market themselves. The difference between the material cost and the connection fee paid by the customer will be reimbursed to the customer after the connection has been finalized. External connection works are carried out by the utility External connection works involve digging, laying down the cables, installation of equipment and the connection. The physical works are done by the utility. The connection fee is also called fee for exploitation; it is a function of the power provided (140 kVA) and the distance from the point of connection. Receive note from utility and conclude contract with electricity supplier, obtain meter installation and flow of electricity
Time to complete
Cost to complete
26 calendar days
no charge
6 calendar days
no charge
37 calendar days
BGN 31,135.0
After the external wiring is finished, CEZ Distribution will issue an official note to the customer. Along with the note, the customer can conclude a 6 contract with the provider of electricity (CEZ Electro Bulgaria AD). The utility needs a copy of the contract for supply of electricity in order to install the meter. The contract is sent automatically to CEZ Distribution by CEZ Electro, the customer does not have to send it him/herself. When concluding the supply contract with CEZ Electro the client is informed when the meter will be installed. * Takes place simultaneously with another procedure. Source: Doing Business database.
7 calendar days
no charge
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REGISTERING PROPERTY
Ensuring formal property rights is fundamental. Effective administration of land is part of that. If formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly administered, it has little chance of being accepted as collateral for loanslimiting access to finance. What do the indicators cover? Doing Business records the full sequence of procedures necessary for a business to purchase property from another business and transfer the property title to the buyers name. The transaction is considered complete when it is opposable to third parties and when the buyer can use the property, use it as collateral for a bank loan or resell it. The ranking on the ease of registering property is the simple average of the percentile rankings on its component indicators: procedures, time and cost. To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used. The parties (buyer and seller): Are limited liability companies, 100% domestically and privately owned. Are located in the periurban area of the economys largest business city. Have 50 employees each, all of whom are nationals. Perform general commercial activities. WHAT THE REGISTERING PROPERTY INDICATORS MEASURE Procedures to legally transfer title on immovable property (number) Preregistration (for example, checking for liens, notarizing sales agreement, paying property transfer taxes) Registration in the economys largest business city Postregistration (for example, filing title with the municipality) Time required to complete each procedure (calendar days) Does not include time spent gathering information Each procedure starts on a separate day Procedure completed once final document is received No prior contact with officials Cost required to complete each procedure (% of property value) Official costs only, no bribes No value added or capital gains taxes included
Has no mortgages attached and has been under the same ownership for the past 10 years. Consists of 557.4 square meters (6,000 square feet) of land and a 10-year-old, 2-story warehouse of 929 square meters (10,000 square feet). The warehouse is in good condition and complies with all safety standards, building codes and legal requirements. The property will be transferred in its entirety.
The property (fully owned by the seller): Has a value of 50 times income per capita. The sale price equals the value. Is registered in the land registry or cadastre, or both, and is free of title disputes. Is located in a periurban commercial zone, and no rezoning is required.
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REGISTERING PROPERTY Where does the economy stand today?

What does it take to complete a property transfer in Bulgaria? According to data collected by Doing Business, registering property there requires 8 Figure 5.1 What it takes to register property in Bulgaria procedures, takes 15 days and costs 2.9% of the property value (figure 5.1).
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
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Globally, Bulgaria stands at 68 in the ranking of 185 economies on the ease of registering property (figure 5.2). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for an entrepreneur in Bulgaria to transfer property.
Figure 5.2 How Bulgaria and comparator economies rank on the ease of registering property
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REGISTERING PROPERTY What are the changes over time?

While the most recent Doing Business data reflect how easy (or difficult) it is to register property in Bulgaria today, data over time show which aspects of the process have changedand which have not (table 5.1). That can help identify where the potential for improvement is greatest.
Table 5.1 The ease of registering property in Bulgaria over time By Doing Business report year Indicator Rank Procedures (number) Time (days) Cost (% of property value) DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 .. 8 19 2.4 .. 8 19 2.3 .. 8 19 2.3 .. 8 19 2.3 .. 8 19 2.3 .. 8 15 2.8 .. 8 15 3.0 68 8 15 3.0 68 8 15 2.9
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. For more information on no practice marks, see the data notes. Source: Doing Business database.
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Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the procedures, time or cost required to complete a property transfer (figure 5.3). These benchmarks help show what is possible in making it easier to register property. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Figure 5.3 Has registering property become easier over time? Procedures (number)
Time (days)
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Cost (% of property value)
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49
Economies worldwide have been making it easier for entrepreneurs to register and transfer propertysuch as by computerizing land registries, introducing time limits for procedures and setting low fixed fees. Many have cut the time required substantiallyenabling buyers to use or mortgage their property earlier. What property registration reforms has Doing Business recorded in Bulgaria (table 5.2)?
Table 5.2 How has Bulgaria made registering property easieror not? By Doing Business report year DB year DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 Reform No reform as measured by Doing Business. No reform as measured by Doing Business. An integrated web-based property register providing online access to the ownership and cadastre status of the properties decreased the total time to register property in Bulgaria. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business.
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REGISTERING PROPERTY What are the details?

The indicators reported here are based on a set of specific proceduresthe steps that a buyer and seller must complete to transfer the property to the buyers nameidentified by Doing Business through information collected from local property lawyers, notaries and property registries. These procedures are those that apply to a transaction matching the standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). STANDARD PROPERTY TRANSFER City: Property Value: Sofia BGN 482,101
The procedures, along with the associated time and cost, are summarized below.
Summary of procedures for registering property in Bulgariaand the time and cost
No. Procedure * The sketch of the estate is drafted by the respective Municipality The draft of the estate is a graphic sketch of the estate with its borders, square meters, and number of the area where the estate is situated. This 3 days (regular); 1 draft is issued at the Cadastre of Real Estate. day Procedure or 4 hours express If the sketch is for a real estate in the urban area, principally, the sketch is (simultaneous with issued by the Local Geodesy, Cartography and Cadastre Service. In case Procedures 2, 3, 4, the sketch is required for agricultural land, the sketch is issued by the and 5) respective municipal agricultural service. If for the respective territory there is no cadastre card adopted and approved, then the sketch is then issued by the Municipality. * Obtain a tax valuation of the property 2 The tax valuation of the property is issued by the respective tax authorities for a 6-months period. A tax valuation is a basis for calculating the fees for notary deeds. * Issuance of certificate of good standing for seller and buyer Certificate will be obtained at the Registration Agency. As of January 1, 2008 all companies in Bulgaria are registered by the new centralized Commercial Register. The companies are to be re-registered until 31 December 2011 with the Commercial Register. Starting January 1, 2012 1 day (simultaneous with Procedures 1, companies, which have not been re-registered with the Register are to 2, 4, and 5) be liquidated. The certificate is needed to show that the company is registered and existing, and that the person who signs on behalf of the company is actually the authorized person to sign. The certificate can be obtained online since 2009. Time to complete Cost to complete
BGN 30 for a 3-day Procedure (regular), BGN 45 for a 1-day Procedure and BGN 90 per 4 hours
3 day Procedure or BGN 40 for a 3-day 14 day Procedure Procedure, BGN 20 (simultaneous with for a 14-day Procedures 1, 3, 4, Procedure and 5)
BGN 7 each
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No.
Procedure
Time to complete
Cost to complete
* Obtain a non-encumbrance certificate from the Real Estate Register 4 The express Procedures are implemented in the Tariff for the taxes collected by the Registry Agency, published in State Gazette, issue 94 of 25 November 2005, last amended by State Gazette issue 104 of 27 December 2011. * Obtain a tax clearance certificate
Regular service (7 BGN 50 for Express working days); Fast service (8 hours), service (3 working BGN 20 for Fast days); Express service (3 working service (8 hours) days), BGN 10 for (simultaneous with regular service (7 Procedures 1, 2, 3, working days) and 5)
7 days The tax clearance certificate, showing that no taxes are owed, is obtained (simultaneous with from the local tax department for both the buyer and the seller, Procedures 1, 2, 3, according to Taxation and Insurance Procedure Code in effect as of 1 and 4) January 2006, namely Art. 87, paragraph 6.
BGN 6
The notary executes the transfer deed The notary executes the transfer deed and collects the money for payment of the state fee (transfer tax) and the registration fee. Usually the notary pays the state and registration fees. This is done for the clients convenience. The parties can pay the fees at the account of the tax authority where the estate is situated and bring the receipts to the notary. Local tax for acquisition of real estate varies between 0.1% to 3% of either the (i) the purchase price or (ii) the tax evaluation of the real estate (whichever one is higher). The local tax is subject to determination by each municipality on yearly basis. The local tax in Sophia increased from 2% to 2.5% in 07.03.2008 according to the Local Taxes and Fees Act.
2.5% of property price (local tax) + 0.1% of property price (Registration fee) + notarys fees according to the following scale and with a maximum of BGN 6,000: An amendment in Local Taxes and Fees Act promulgated in State Gazette No 95/ 01 Dec. 2009 introduces a new legislative approach for determining the local tax amount - it shall be fixed by the Municipality Council of each Municipality in the following limits set forth in law: from 0.1% to 3 % basing on the value of the property transferred Reform adopted by an amendment of
1 day
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No.
Procedure
Time to complete
Cost to complete the Tariff of Notary Fees to the Notary Public and Notarial Activity Act promulgated in State Gazette 39/2009, in force as of 01.07.2009, concerns the amount of the notary fees due upon property transfers: Up to BGN 100: BGN 30 From BGN 101 - to BGN 1,000: BGN 30 + 1,5 % of excess over BGN 100 From BGN 1001 - to BGN 10,000: BGN 43,50 + 1,3 % of excess over BGN 1,000 From BGN 10 001 to BGN 50,000 : BGN 160,50 + 0,8 % of excess over BGN 10,000 From BGN 50 001 to BGN 100,000 : BGN 480,50 + 0,5 % of excess over BGN 50,000 From BGN 100 001 to BGN 500,000: BGN 730,50 + 0,2 % of excess over BGN 100,000 Over BGN 500,000: BGN 1530,50 + 0,1 % of excess over BGN 500,000 but no more than BGN 6,000 New upper limit for
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No.
Procedure
Time to complete
Cost to complete the notarial fees is set forth by the mentioned amendment of the Tariff - at the amount of BGN 600
Registration of the notarized deed at the Registry The notary will register the notarized deed at the registration office with the respective district court. This can be done by the parties too, but it is most common that the notary will do it (and it is included in the above fees). The notary will pay registration and state fees collected previously. Registration should take 1 day, but it can take up to 3 days during busy periods. According to Art.25, para 5 of the Notary Public and Notarial Activity Law of 2009 (last amendment of the Notary Public and Notarial Activity Act was promulgated in State Gazette, issue 82 of 16 October 2009, http://dv.parliament.bg/DVWeb/broeveList.faces), the notary now has to submit the notarized deed in the same day it is signed. In practice, this generally happens in Sophia. 7 The notarized deed will be registered by the Notary Public with the respective office of the Registry Agency. The Notary Public and Notarial Activity Law last amended by State Gazette issue 82 of October 21, 2011. If a notary public does not perform their obligation for entry of a notary deed or other notary certified act with the real estate register, the interested persons are entitled to claim the suffered damages. Furthermore, the interested persons may address the Notary Chamber regarding the violations of the notary's obligations. This may entail disciplinary proceedings against the respective notary public. This amendment also ensures that the notaries public have access to the National Database "Population" and to the National Automatic Information Fund for personal identity documents. It also introduced an obligation for the notaries public to make special checks in the database and the fund when performing notary certifications connected to rights over real estates. Parties receive a copy of the registered deed 8 Parties will receive a copy of the registered deed the same or next day the deed has been registered by the notary. 1 day no cost 1-2 days Already paid in Procedure 4
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GETTING CREDIT
Two types of frameworks can facilitate access to credit and improve its allocation: credit information systems and the legal rights of borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders to view a potential borrowers financial history (positive or negative)valuable information to consider when assessing risk. And they permit borrowers to establish a good credit history that will allow easier access to credit. Sound collateral laws enable businesses to use their assets, especially movable property, as security to generate capitalwhile strong creditors rights have been associated with higher ratios of private sector credit to GDP. What do the indicators cover? Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a public credit registry or a private credit bureau. The strength of legal rights index measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. Doing Business uses case scenarios to determine the scope of the secured transactions system, involving a secured borrower and a secured lender and examining legal restrictions on the use of movable collateral. These scenarios assume that the borrower: Is a private, limited liability company. Has its headquarters and only base of operations in the largest business city. WHAT THE GETTING CREDIT INDICATORS MEASURE Strength of legal rights index (010) Protection of rights of borrowers and lenders through collateral laws Protection of secured creditors rights through bankruptcy laws Depth of credit information index (06) Scope and accessibility of credit information distributed by public credit registries and private credit bureaus Public credit registry coverage (% of adults) Number of individuals and firms listed in public credit registry as percentage of adult population Private credit bureau coverage (% of adults) Number of individuals and firms listed in largest private credit bureau as percentage of adult population
Has 100 employees. Is 100% domestically owned, as is the lender.
The ranking on the ease of getting credit is based on the percentile rankings on the sum of its component indicators: the depth of credit information index and the strength of legal rights index.
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GETTING CREDIT Where does the economy stand today?

How well do the credit information system and collateral and bankruptcy laws in Bulgaria facilitate access to credit? The economy has a score of 4 on the depth of credit information index and a score of 8 on the strength of legal rights index (see the summary of scoring at the end of this chapter for details). Higher scores indicate more credit information and stronger legal rights for borrowers and lenders. Globally, Bulgaria stands at 40 in the ranking of 185 economies on the ease of getting credit (figure 6.1). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how well regulations and institutions in Bulgaria support lending and borrowing.
Figure 6.1 How Bulgaria and comparator economies rank on the ease of getting credit
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GETTING CREDIT What are the changes over time?

While the most recent Doing Business data reflect how well the credit information system and collateral and bankruptcy laws in Bulgaria support lending and borrowing today, data over time can help show where Table 6.1 The ease of getting credit in Bulgaria over time By Doing Business report year Indicator Rank Strength of legal rights index (0-10) Depth of credit information index (0-6) Public registry coverage (% of adults) Private bureau coverage (% of adults) DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 .. 8 3 1.3 0.0 .. 8 4 13.6 0.0 .. 8 5 20.7 n.a. .. 8 6 25.4 3.0 .. 8 6 30.7 5.0 .. 8 6 34.8 6.2 .. 8 6 37.0 13.1 38 8 4 52.8 28.8 40 8 4 56.3 0.0 institutions and regulations have been strengthened and where they have not (table 6.1). That can help identify where the potential for improvement is greatest.
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. Source: Doing Business database.
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GETTING CREDIT
One way to put an economys score on the getting credit indicators into context is to see where the economy stands in the distribution of scores across economies. Figure 6.2 highlights the score on the strength of legal rights index for Bulgaria in 2012 and shows the number of economies with this score in 2012 as well as the regional average score. Figure 6.3 shows the same thing for the depth of credit information index.
Figure 6.2 How strong are legal rights for borrowers and lenders?
Number of economies with each score on strength of legal rights index (010), 2012
Figure 6.3 How much credit information is shared and how widely?
Number of economies with each score on depth of credit information index (06), 2012
Note: Higher scores indicate that collateral and bankruptcy laws are better designed to facilitate access to credit. Source: Doing Business database.
Note: Higher scores indicate the availability of more credit information, from either a public credit registry or a private credit bureau, to facilitate lending decisions. Regional averages for the depth of credit information index exclude economies with no public registry or private bureau. Source: Doing Business database.
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GETTING CREDIT
When economies strengthen the legal rights of lenders and borrowers under collateral and bankruptcy laws, and increase the scope, coverage and accessibility of credit information, they can increase entrepreneurs access to credit. What credit reforms has Doing Business recorded in Bulgaria (table 6.2)?
Table 6.2 How has Bulgaria made getting credit easieror not? By Doing Business report year DB year DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 Reform No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. Bulgaria made access to credit information more difficult by stopping the distribution of credit reports to financial institutions by the private credit bureau (Experian). No reform as measured by Doing Business.
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GETTING CREDIT What are the details?

The getting credit indicators reported here for Bulgaria are based on detailed information collected in that economy. The data on credit information sharing are collected through a survey of a public credit registry or private credit bureau (if one exists). To construct the depth of credit information index, a score of 1 is assigned for each of 6 features of the public credit registry or private credit bureau (see summary of scoring below). The data on the legal rights of borrowers and lenders are gathered through a survey of financial lawyers and verified through analysis of laws and regulations as well as public sources of information on collateral and bankruptcy laws. For the strength of legal rights index, a score of 1 is assigned for each of 8 aspects related to legal rights in collateral law and 2 aspects in bankruptcy law.
Summary of scoring for the getting credit indicators in Bulgaria Indicator Strength of legal rights index (0-10) Depth of credit information index (0-6) Public registry coverage (% of adults) Private bureau coverage (% of adults) Bulgaria 8 4 56.3 0.0 Eastern Europe & OECD high income Central Asia average average 7 5 31.9 44.8 7 5 31.5 74.6
Note: In cases where an economys regional classification is OECD high income, regional averages above are only displayed once. Regional averages for the depth of credit information index exclude economies with no public registry or private bureau. Regional averages for the public registry coverage exclude economies with no public registry. Regional averages for the private bureau coverage exclude economies with no private bureau.
Strength of legal rights index (010) Can any business use movable assets as collateral while keeping possession of the assets; and any financial institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation, that is unified geographically and by asset type, with an electronic database indexed by debtor's names?
Index score: 8 No Yes Yes Yes
Yes
No
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Strength of legal rights index (010) Are secured creditors paid first (i.e. before general tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Are secured creditors paid first (i.e. before general tax claims and employee claims) when a business is liquidated? Are secured creditors either not subject to an automatic stay or moratorium on enforcement procedures when a debtor enters a court-supervised reorganization procedure, or the law provides secured creditors with grounds for relief from an automatic stay or Does the law allow parties to agree in a collateral agreement that the lender may enforce its security right out of court, at the time a security interest is created?
Index score: 8 Yes Yes
Yes
Yes
Depth of credit information index (06) Are data on both firms and individuals distributed? Are both positive and negative data distributed? Does the registry distribute credit information from retailers, trade creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Is data on all loans below 1% of income per capita distributed? Is it guaranteed by law that borrowers can inspect their data in the largest credit registry?
Private credit bureau No No No
Public credit registry Yes Yes No
Index score: 4 1 1 0
No No No
No Yes Yes
0 1 1
Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry.
Coverage Number of firms Number of individuals

Private credit bureau Public credit registry 0 0 154,476 2,725,876
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PROTECTING INVESTORS
Investor protections matter for the ability of companies to raise the capital they need to grow, innovate, diversify and compete. If the laws do not provide such protections, investors may be reluctant to invest unless they become the controlling shareholders. Strong regulations clearly define related-party transactions, promote clear and efficient disclosure requirements, require shareholder participation in major decisions of the company and set clear standards of accountability for company insiders. What do the indicators cover? Doing Business measures the strength of minority shareholder protections against directors use of corporate assets for personal gainor self-dealing. The indicators distinguish 3 dimensions of investor protections: transparency of related-party transactions (extent of disclosure index), liability for self-dealing (extent of director liability index) and shareholders ability to sue officers and directors for misconduct (ease of shareholder suits index). The ranking on the strength of investor protection index is the simple average of the percentile rankings on these 3 indices. To make the data comparable across economies, a case study uses several assumptions about the business and the transaction. The business (Buyer): Is a publicly traded corporation listed on the economys most important stock exchange (or at least a large private company with multiple shareholders). Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not specifically required by law. The transaction involves the following details: Mr. James, a director and the majority shareholder of the company, proposes that WHAT THE PROTECTING INVESTORS INDICATORS MEASURE Extent of disclosure index (010) Who can approve related-party transactions Disclosure requirements in case of relatedparty transactions Extent of director liability index (010) Ability of shareholders to hold interested parties and members of the approving body liable in case of related-party transactions Available legal remedies (damages, repayment of profits, fines, imprisonment and rescission of the transaction) Ability of shareholders to sue directly or derivatively Ease of shareholder suits index (010) Access to internal corporate documents (directly or through a government inspector) Documents and information available during trial Strength of investor protection index (010) Simple average of the extent of disclosure, extent of director liability and ease of shareholder suits indices
the company purchase used trucks from another company he owns. The price is higher than the going price for used trucks, but the transaction goes forward. All required approvals are obtained, and all required disclosures made, though the transaction is prejudicial to Buyer. Shareholders sue the interested parties and the members of the board of directors.
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PROTECTING INVESTORS Where does the economy stand today?

How strong are investor protections in Bulgaria? The economy has a score of 6.0 on the strength of investor protection index, with a higher score indicating stronger protections (see the summary of scoring at the end of this chapter for details). Globally, Bulgaria stands at 49 in the ranking of 185 economies on the strength of investor protection Figure 7.1 How Bulgaria and comparator economies rank on the strength of investor protection index index (figure 7.1). While the indicator does not measure all aspects related to the protection of minority investors, a higher ranking does indicate that an economys regulations offer stronger investor protections against self-dealing in the areas measured.
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PROTECTING INVESTORS What are the changes over time?

While the most recent Doing Business data reflect how well regulations in Bulgaria protect minority investors today, data over time show whether the protections have been strengthened (table 7.1). And the global ranking on the strength of investor protection index over time shows whether the economy is slipping behind other economies in investor protectionsor surpassing them.
Table 7.1 The strength of investor protections in Bulgaria over time By Doing Business report year Indicator Rank Extent of disclosure index (0-10) Extent of director liability index (010) Ease of shareholder suits index (0-10) Strength of investor protection index (0-10) DB2006 .. 10 DB2007 .. 10 DB2008 .. 10 DB2009 .. 10 DB2010 .. 10 DB2011 .. 10 DB2012 46 10 DB2013 49 10
6.0
6.0
6.0
6.0
6.0
6.0
6.0
6.0
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One way to put an economys scores on the protecting investors indicators into context is to see where the economy stands in the distribution of scores across economies. Figure 7.2 highlights the score on the extent of disclosure index for Bulgaria in 2012 and Figure 7.2 How strong are disclosure requirements?
Number of economies with each score on extent of disclosure index (010), 2012
shows the number of economies with this score in 2012 as well as the regional average score. Figure 7.3 shows the same thing for the extent of director liability index, and figure 7.4 for the ease of shareholder suits index. Figure 7.3 How strong is the liability regime for directors?
Number of economies with each score on extent of director liability index (010), 2012
Note: Higher scores indicate greater disclosure. Source: Doing Business database.
Note: Higher scores indicate greater liability of directors. No economy receives a score of 10 on the extent of director liability index. Source: Doing Business database.
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Figure 7.4 How easy is access to internal corporate documents?
Number of economies with each score on ease of shareholder suits index (010), 2012
Note: Higher scores indicate greater powers of shareholders to challenge the transaction. Source: Doing Business database.
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The scores recorded over time for Bulgaria on the strength of investor protection index may also be revealing (figure 7.5). Equally interesting may be the changes over time in the regional average score on this index.
Figure 7.5 Have investor protections become stronger over time? Strength of investor protection index (010)
Note: The higher the score, the stronger the investor protections. Source: Doing Business database.
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Economies with the strongest protections of minority investors from self-dealing require more disclosure and define clear duties for directors. They also have well-functioning courts and up-to-date procedural rules that give minority investors the means to prove their case and obtain a judgment within a reasonable time. So reforms to strengthen investor protections may move ahead on different frontssuch as through new or amended company laws or civil procedure rules. What investor protection reforms has Doing Business recorded in Bulgaria (table 7.2)?
Table 7.2 How has Bulgaria strengthened investor protectionsor not? By Doing Business report year DB year DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 Reform No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business.
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PROTECTING INVESTORS What are the details?

The protecting investors indicators reported here for Bulgaria are based on detailed information collected through a survey of corporate and securities lawyers as well as on securities regulations, company laws and court rules of evidence. To construct the extent of disclosure, extent of director liability and ease of shareholder suits indices, a score is assigned for each of a range of conditions relating to disclosure, director liability and shareholder suits in a standard case study transaction (see the notes at the end of this chapter). The summary below shows the details underlying the scores for Bulgaria.
Summary of scoring for the protecting investors indicators in Bulgaria Indicator Extent of disclosure index (0-10) Extent of director liability index (0-10) Ease of shareholder suits index (0-10) Strength of investor protection index (0-10) Bulgaria 10 1 7 6.0 Eastern Europe & OECD high income Central Asia average average 7 5 6 5.9 6 5 7 6.1
Note: In cases where an economys regional classification is OECD high income, regional averages above are only displayed once.
Score Extent of disclosure index (0-10) What corporate body provides legally sufficient approval for the transaction? Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? Whether immediate disclosure of the transaction to the public and/or shareholders is required? Whether disclosure of the transaction in published periodic filings (annual reports) is required? Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? 10 3 2 2 2 1 1 1
Score description
Shareholders meeting and Mr. James is not allowed to vote Full disclosure of all material facts Disclosure on the transaction and Mr. James' conflict of interest Disclosure on the transaction and Mr. James' conflict of interest Yes
Yes
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Score Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? Whether shareholders can hold members of the approving body liable for the damage that the BuyerSeller transaction causes to the company? Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? Whether fines and imprisonment can be applied against Mr. James? Ease of shareholder suits index (0-10) Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? Whether the plaintiff can directly question the defendant and witnesses during trial? Whether the level of proof required for civil suits is lower than that of criminal cases? Strength of investor protection index (0-10)
Score description
Not liable
Not liable Not possible or only in case of Seller's fraud or bad faith No
No
0 7 0
No
No
Yes Any information that may lead to the discovery of relevant information Yes
0 1 6.0
No Yes
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PAYING TAXES
Taxes are essential. They fund the public amenities, infrastructure and services that are crucial for a properly functioning economy. But the level of tax rates needs to be carefully chosenand needless complexity in tax rules avoided. According to Doing Business data, in economies where it is more difficult and costly to pay taxes, larger shares of economic activity end up in the informal sector where businesses pay no taxes at all. What do the indicators cover? Using a case scenario, Doing Business measures the taxes and mandatory contributions that a medium-size company must pay in a given year as well as the administrative burden of paying taxes and contributions. This case scenario uses a set of financial statements and assumptions about transactions made over the year. Information is also compiled on the frequency of filing and payments as well as time taken to comply with tax laws. The ranking on the ease of paying taxes is the simple average of the percentile rankings on its component indicators: number of annual payments, time and total tax rate, with a threshold 1 being applied to the total tax rate. To make the data comparable across economies, several assumptions about the business and the taxes and contributions are used. TaxpayerCo is a medium-size business that started operations on January 1, 2010. The business starts from the same financial position in each economy. All the taxes and mandatory contributions paid during the second year of operation are recorded. Taxes and mandatory contributions are measured at all levels of government. WHAT THE PAYING TAXES INDICATORS MEASURE Tax payments for a manufacturing company in 2011 (number per year adjusted for electronic or joint filing and payment) Total number of taxes and contributions paid, including consumption taxes (value added tax, sales tax or goods and service tax) Method and frequency of filing and payment Time required to comply with 3 major taxes (hours per year) Collecting information and computing the tax payable Completing tax return forms, filing with proper agencies Arranging payment or withholding Preparing separate tax accounting books, if required Total tax rate (% of profit before all taxes) Profit or corporate income tax Social contributions and labor taxes paid by the employer Property and property transfer taxes Dividend, capital gains and financial transactions taxes Waste collection, vehicle, road and other taxes Taxes and mandatory contributions include corporate income tax, turnover tax and all labor taxes and contributions paid by the company. A range of standard deductions and exemptions are also recorded.
The threshold is defined as the highest total tax rate among the top 15% of economies in the ranking on the total tax rate. It is calculated and adjusted on a yearly basis. The threshold is not based on any economic theory of an optimal tax rate that minimizes distortions or maximizes efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company because they raise public revenue in other waysfor example, through taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). This years threshold is 25.7%.
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PAYING TAXES Where does the economy stand today?

What is the administrative burden of complying with taxes in Bulgariaand how much do firms pay in taxes? On average, firms make 15 tax payments a year, spend 454 hours a year filing, preparing and paying taxes and pay total taxes amounting to 28.7% of profit (see the summary at the end of this chapter for details). Globally, Bulgaria stands at 91 in the ranking of 185 economies on the ease of paying taxes (figure 8.1). The rankings for comparator economies and the regional average ranking provide other useful information for assessing the tax compliance burden for businesses in Bulgaria.
Figure 8.1 How Bulgaria and comparator economies rank on the ease of paying taxes
Note: DB2013 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 25.7% applied in DB2013, the total tax rate is set at 25.7% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database.
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PAYING TAXES What are the changes over time?

While the most recent Doing Business data reflect how easy (or difficult) it is to comply with tax rules in Bulgaria today, data over time show which aspects of Table 8.1 The ease of paying taxes in Bulgaria over time By Doing Business report year Indicator Rank Payments (number per year) Time (hours per year) Total tax rate (% profit) DB2006 .. 29 616 46.0 DB2007 .. 29 616 42.5 DB2008 .. 15 616 36.8 DB2009 .. 15 616 34.9 DB2010 .. 15 616 31.4 DB2011 .. 15 616 29.0 DB2012 83 15 500 28.1 DB2013 91 15 454 28.7 the process have changed and which have not (table 8.1). That can help identify where the potential for easing tax compliance is greatest.
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. DB2013 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 25.7% applied in DB2013, the total tax rate is set at 25.7% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database.
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PAYING TAXES
Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the number of payments or the time required to prepare and file taxes (figure 8.2). These benchmarks help show what is Figure 8.2 Has paying taxes become easier over time? Payments (number per year) possible in easing the administrative burden of tax compliance. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Time (hours per year)
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PAYING TAXES
Total tax rate (% of profit)
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PAYING TAXES
Economies around the world have made paying taxes faster and easier for businessessuch as by consolidating filings, reducing the frequency of payments or offering electronic filing and payment. Many have lowered tax rates. Changes have brought concrete results. Some economies simplifying tax payment and reducing rates have seen tax revenue rise. What tax reforms has Doing Business recorded in Bulgaria (table 8.2)?
Table 8.2 How has Bulgaria made paying taxes easieror not? By Doing Business report year DB year Reform Bulgaria reduced the tax burden for companies by reducing the corporate income tax rate and the social security contribution and eased the system of tax payment through the diffusion of e-filing and e-payment New Corporate Income Tax and Value Added Tax Acts were introduced. Additional annual VAT return abolished. Employer share of social security reduced by 5%. No reform as measured by Doing Business. Bulgaria reduced employer contribution rates for social security. No reform as measured by Doing Business. No reform as measured by Doing Business.
DB2008
DB2009 DB2010 DB2011 DB2012 DB2013
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PAYING TAXES What are the details?

The indicators reported here for Bulgaria are based on a standard set of taxes and contributions that would be paid by the case study company used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Tax practitioners are asked to review standard financial statements as well as a standard list of transactions that the company completed during the year. Respondents are asked how much in taxes and mandatory contributions the business must pay and what the process is for doing so. LOCATION OF STANDARDIZED COMPANY City: Sofia
The taxes and contributions paid are listed in the summary below, along with the associated number of payments, time and tax rate.
Summary of tax rates and administrative burden in Bulgaria Indicator Payments (number per year) Time (hours per year) Profit tax (%) Labor tax and contributions (%) Other taxes (%) Total tax rate (% profit) Bulgaria 15 454 4.8 20.2 3.7 28.7 Eastern Europe & OECD high income Central Asia average average 28 260 9.1 22.1 9.3 40.5 12 176 15.2 23.8 3.7 42.7
Tax or mandatory contribution Social security contributions Corporate income tax
Payments (number) 1 1
Notes on payments online filing online filing
Time (hours) 256 33
Statutory tax rate 17.8%-18.5% 10%
Tax base gross salaries taxable profit
Total tax Notes on rate (% of total tax rate profit) 20.2 4.8
Fuel tax
included in 615 per liter the price of fuel
1.1
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Tax or mandatory contribution Fees for municipal services (garbage collection fee) Sofia
Payments (number)
Notes on payments
Time (hours)
Statutory tax rate BGN1300+0. 35%
Tax base tax value of land and building
Total tax Notes on rate (% of total tax rate profit) 0.9
Stamp duty on property transfer
higher of notary fees tax value of BGN 6,000 and agreed and 0.1% of value of real sales price estate BGN 1300 type of vehicle tax value of land and building per truck value added gross expenses
0.9
Vignette Real estate tax on the land and building Vehicle tax Value added tax (VAT) Final/one-off on corporate on certain expenses Totals Source: Doing Business database.
0.4
2 2 1 1 15 online filing online filing
0 0 165 0 454
0% BGN 296 20% 10%
0.3 0.1 0 0 28.7 not included small amount
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TRADING ACROSS BORDERS

In todays globalized world, making trade between economies easier is increasingly important for business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to extra costs and delays for exporters and importers, stifling trade potential. Research shows that exporters in developing countries gain more from a 10% drop in their trading costs than from a similar reduction in the tariffs applied to their products in global markets. What do the indicators cover? Doing Business measures the time and cost (excluding tariffs and the time and cost for sea transport) associated with exporting and importing a standard shipment of goods by sea transport, and the number of documents necessary to complete the transaction. The indicators cover procedural requirements such as documentation requirements and procedures at customs and other regulatory agencies as well as at the port. They also cover trade logistics, including the time and cost of inland transport to the largest business city. The ranking on the ease of trading across borders is the simple average of the percentile rankings on its component indicators: documents, time and cost to export and import. To make the data comparable across economies, Doing Business uses several assumptions about the business and the traded goods. The business: Is of medium size and employs 60 people. Is located in the periurban area of the economys largest business city. Is a private, limited liability company, domestically owned, formally registered and operating under commercial laws and regulations of the economy. Do not require refrigeration or any other special environment. Do not require any special phytosanitary or environmental safety standards other than accepted international standards. Are one of the economys leading export or import products. Are transported in a dry-cargo, 20-foot full container load. WHAT THE TRADING ACROSS BORDERS INDICATORS MEASURE Documents required to export and import (number) Bank documents Customs clearance documents Port and terminal handling documents Transport documents Time required to export and import (days) Obtaining, filling out and submitting all the documents Inland transport and handling Customs clearance and inspections Port and terminal handling Does not include sea transport time Cost required to export and import (US$ per container) All documentation Inland transport and handling Customs clearance and inspections Port and terminal handling Official costs only, no bribes
The traded goods: Are not hazardous nor do they include military items.
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TRADING ACROSS BORDERS Where does the economy stand today?

What does it take to export or import in Bulgaria? According to data collected by Doing Business, exporting a standard container of goods requires 5 documents, takes 21 days and costs $1551. Importing the same container of goods requires 6 documents, takes 17 days and costs $1626 (see the summary of procedures and documents at the end of this chapter for details). Globally, Bulgaria stands at 93 in the ranking of 185 economies on the ease of trading across borders (figure 9.1). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for a business in Bulgaria to export and import goods.
Figure 9.1 How Bulgaria and comparator economies rank on the ease of trading across borders
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TRADING ACROSS BORDERS What are the changes over time?

While the most recent Doing Business data reflect how easy (or difficult) it is to export or import in Bulgaria today, data over time show which aspects of the process have changedand which have not (table 9.1). That can help identify where the potential for improvement is greatest.
Table 9.1 The ease of trading across borders in Bulgaria over time By Doing Business report year Indicator Rank Documents to export (number) Time to export (days) Cost to export (US$ per container) Documents to import (number) Time to import (days) Cost to import (US$ per container) DB2006 .. 7 26 1,233 9 22 1,201 DB2007 .. 7 26 1,233 9 22 1,201 DB2008 .. 5 23 1,329 6 18 1,377 DB2009 .. 5 23 1,626 6 18 1,776 DB2010 .. 5 23 1,551 6 18 1,666 DB2011 .. 5 23 1,551 6 18 1,666 DB2012 95 5 21 1,551 6 17 1,666 DB2013 93 5 21 1,551 6 17 1,626
Doing Business 2013
Bulgaria
81

Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the documents, time or cost required to export or import (figure 9.2). These benchmarks help show what is possible in making it easier to trade across borders. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Figure 9.2 Has trading across borders become easier over time? Documents to export (number)
Time to export (days)
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Cost to export (US$ per container)
Documents to import (number)
Doing Business 2013
Bulgaria
83

Time to import (days)
Cost to import (US$ per container)
Doing Business 2013
Bulgaria
84

In economies around the world, trading across borders as measured by Doing Business has become faster and easier over the years. Governments have introduced tools to facilitate tradeincluding single windows, risk-based inspections and electronic data interchange systems. These changes help improve the trading environment and boost firms international competitiveness. What trade reforms has Doing Business recorded in Bulgaria (table 9.2)?
Table 9.2 How has Bulgaria made trading across borders easieror not? By Doing Business report year DB year DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 Reform No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. Bulgaria made trading across borders faster by introducing online submission of customs declaration forms. No reform as measured by Doing Business.
Doing Business 2013
Bulgaria
85
TRADING ACROSS BORDERS What are the details?

The indicators reported here for Bulgaria are based on a set of specific procedural requirements for trading a standard shipment of goods by ocean transport (see the section in this chapter on what the indicators cover). Information on the procedures as well as the required documents and the time and cost to complete each procedure is collected from local freight forwarders, shipping lines, customs brokers, port officials and banks. LOCATION OF STANDARDIZED COMPANY City: Sofia
The procedural requirements, and the associated time and cost, for exporting and importing a standard shipment of goods are listed in the summary below, along with the required documents.
Summary of procedures and documents for trading across borders in Bulgaria Indicator Documents to export (number) Time to export (days) Cost to export (US$ per container) Documents to import (number) Time to import (days) Cost to import (US$ per container) Bulgaria 5 21 1,551 6 17 1,626 Eastern Europe & OECD high income Central Asia average average 7 26 2,134 8 29 2,349 4 10 1,028 5 10 1,080
Procedures to export Documents preparation Customs clearance and technical control Ports and terminal handling Inland transportation and handling Totals
Time (days) 13 2 4 2 21
Cost (US$) 200 75 246 1,030 1,551
Procedures to import Documents preparation
Time (days) 9
Cost (US$) 200
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Bulgaria
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Procedures to import Customs clearance and technical control Ports and terminal handling Inland transportation and handling Totals
Time (days) 2 4 2 17
Cost (US$) 100 246 1,080 1,626
Documents to export Bill of lading Certificate of origin Commercial invoice Customs export declaration Packing list
Documents to import Bill of lading Cargo release order Certificate of origin Commercial invoice Customs import declaration Packing list
Doing Business 2013
Bulgaria
87
ENFORCING CONTRACTS
Well-functioning courts help businesses expand their network and markets. Without effective contract enforcement, people might well do business only with family, friends and others with whom they have established relationships. Where contract enforcement is efficient, firms are more likely to engage with new borrowers or customers, and they have greater access to credit. What do the indicators cover? Doing Business measures the efficiency of the judicial system in resolving a commercial dispute before local courts. Following the step-by-step evolution of a standardized case study, it collects data relating to the time, cost and procedural complexity of resolving a commercial lawsuit. The ranking on the ease of enforcing contracts is the simple average of the percentile rankings on its component indicators: procedures, time and cost. The dispute in the case study involves the breach of a sales contract between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. To make the data comparable across economies, Doing Business uses several assumptions about the case: The seller and buyer are located in the economys largest business city. The buyer orders custom-made goods, then fails to pay. The seller sues the buyer before a competent court. The value of the claim is 200% of income per capita. The seller requests a pretrial attachment to secure the claim. The dispute on the quality of the goods requires an expert opinion. The judge decides in favor of the seller; there is no appeal. The seller enforces the judgment through a public sale of the buyers movable assets. WHAT THE ENFORCING CONTRACTS INDICATORS MEASURE Procedures to enforce a contract through the courts (number) Any interaction between the parties in a commercial dispute, or between them and the judge or court officer Steps to file and serve the case Steps for trial and judgment Steps to enforce the judgment Time required to complete procedures (calendar days) Time to file and serve the case Time for trial and obtaining judgment Time to enforce the judgment Cost required to complete procedures (% of claim) No bribes Average attorney fees Court costs Enforcement costs
Doing Business 2013
Bulgaria
88
ENFORCING CONTRACTS Where does the economy stand today?

How efficient is the process of resolving a commercial dispute through the courts in Bulgaria? According to data collected by Doing Business, enforcing a contract takes 564 days, costs 23.8% of the value of the claim and requires 39 procedures (see the summary at the end of this chapter for details). Globally, Bulgaria stands at 86 in the ranking of 185 economies on the ease of enforcing contracts (figure 10.1). The rankings for comparator economies and the regional average ranking provide other useful benchmarks for assessing the efficiency of contract enforcement in Bulgaria.
Figure 10.1 How Bulgaria and comparator economies rank on the ease of enforcing contracts
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ENFORCING CONTRACTS What are the changes over time?

While the most recent Doing Business data reflect how easy (or difficult) it is to enforce a contract in Bulgaria today, data on the underlying indicators over time help identify which areas have changed and where the potential for improvement is greatest (table 10.1).
Table 10.1 The ease of enforcing contracts in Bulgaria over time By Doing Business report year Indicator Rank Time (days) Cost (% of claim) Procedures (number) DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 .. 564 23.8 40 .. 564 23.8 40 .. 564 23.8 40 .. 564 23.8 40 .. 564 23.8 40 .. 564 23.8 39 .. 564 23.8 39 .. 564 23.8 39 88 564 23.8 39 86 564 23.8 39
Doing Business 2013
Bulgaria
90
ENFORCING CONTRACTS
Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the number of steps, time or cost required to enforce a contract through the courts (figure 10.2). These benchmarks help show what is possible in improving the efficiency of contract enforcement. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Figure 10.2 Has enforcing contracts become easier over time? Time (days)
Cost (% of claim)
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ENFORCING CONTRACTS
Procedures (number)
Doing Business 2013
Bulgaria
92
ENFORCING CONTRACTS
Economies in all regions have improved contract enforcement in recent years. A judiciary can be improved in different ways. Higher-income economies tend to look for ways to enhance efficiency by introducing new technology. Lower-income economies often work on reducing backlogs by introducing periodic reviews to clear inactive cases from the docket and by making procedures faster. What reforms making it easier (or more difficult) to enforce contracts has Doing Business recorded in Bulgaria (table 10.2)?
Table 10.2 How has Bulgaria made enforcing contracts easieror not? By Doing Business report year DB year DB2008 Reform Bulgaria introduced changes to the judicial system, increasing transparency and appointing private bailiffs. Bulgaria amended many provisions of its civil code, reforming rules for evidence and default judgment. The minimum threshold for the lower jurisdiction was revised upward and powers given to the last instance civil court to select which cases to hear, limiting abuse of the appeals process. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business. No reform as measured by Doing Business.
DB2009
DB2010 DB2011 DB2012 DB2013
Doing Business 2013
Bulgaria
93
ENFORCING CONTRACTS What are the details?

The indicators reported here for Bulgaria are based on a set of specific procedural steps required to resolve a standardized commercial dispute through the courts (see the section in this chapter on what the indicators cover). These procedures, and the time and cost of completing them, are identified through study of the codes of civil procedure and other court regulations, as well as through surveys completed by local litigation lawyers (and, in a quarter of the economies covered by Doing Business, by judges as well). COMPETENT COURT City: Sofia
The procedures for resolving a commercial lawsuit, and the associated time and cost, are listed in the summary below.
Summary of procedures for enforcing a contract in Bulgariaand the time and cost Indicator Time (days) Filing and service Trial and judgment Enforcement of judgment Cost (% of claim) Attorney cost (% of claim) Court cost (% of claim) Enforcement Cost (% of claim) Procedures (number) Bulgaria 564 105 334 125 23.8 10.0 5.6 8.2 39 37 31 25.8 20.1 Eastern Europe & OECD high income Central Asia average average 414 510
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ENFORCING CONTRACTS
No. Procedure Filing and service: 1 2 * * 3 * 4 * Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the contract. Plaintiffs hiring of lawyer: Plaintiff hires a lawyer to represent him before the court. Plaintiffs filing of summons and complaint: Plaintiff files his summons and complaint with the court, orally or in writing. Plaintiffs payment of court fees: Plaintiff pays court duties, stamp duties, or any other type of court fee. Registration of court case: The court administration registers the lawsuit or court case. This includes assigning a reference number to the lawsuit or court case. Assignment of court case to a judge: The court case is assigned to a specific judge through a random procedure, automated system, ruling of an administrative judge, court officer, etc. Court scrutiny of summons and complaint: A judge examines Plaintiff's summons and complaint for formal requirements. Judge admits summons and complaint: After verifying the formal requirements, the judge decides to admit Plaintiffs summons and complaint. Delivery of summons and complaint to person authorized to perform service of process on Defendant: The judge or a court officer delivers the summons to a summoning office, officer, or authorized person (including Plaintiff), for service of process on Defendant. Arrangements for physical delivery of summons and complaint: Plaintiff takes whatever steps are necessary to arrange for physical service of process on Defendant, such as instructing a court officer or a (private) bailiff. Mailing of summons and complaint: Court or process server, including (private) bailiff, mails summons and complaint to Defendant. First attempt at physical delivery: A first attempt to physically deliver summons and complaint to Defendant is successful in the majority of cases. Application for pre-judgment attachment: Plaintiff submits an application in writing for the attachment of Defendant's property prior to judgment. (see assumption 5) Decision on pre-judgment attachment: The judge decides whether to grant Plaintiffs request for pre-judgment attachment of Defendants property and notifies Plaintiff and Defendant of the decision. This step may include requesting that Plaintiff submit guarantees or bonds to secure Defendant Guarantees securing attached property: Plaintiff typically submits guarantees or bonds to secure Defendant against possible damages to attached property. (see assumption 5) Pre-judgment attachment.: Defendant's property is attached prior to judgment. Attachment is either physical or achieved by registering, marking, debiting or separating assets. (see assumption 5) Trial and judgment:
* * 6 *
7 8
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No.
Procedure Defendants filing of defense or answer to Plaintiffs claim: Defendant files a written pleading which includes his defense or answer on the merits of the case. Defendant's written answer may or may not include witness statements, expert statements, the documents Defendant relies on as evidence and the legal authori Court appointment of independent expert: Judge appoints, either at the parties' request or at his own initiative, an independent expert to decide whether the quality of the goods Plaintiff delivered to Defendant is adequate. (see assumption 6-b of this case) Notification of court-appointment of independent expert: The court notifies both parties that the court is appointing an independent expert. (see assumption 6-b of this case) Delivery of expert report by court-appointed expert: The independent expert appointed by the court delivers his or her expert report to the court. (see assumption 6-b of this case) Setting of date(s) for oral hearing or trial: The judge sets the date(s) for the oral hearing or trial. Summoning of (expert) witnesses: The court summons (expert) witnesses to appear in court for the oral hearing or trial. (see assumption 6-a) Adjournments: Court proceedings are delayed because one or both parties request and obtain an adjournment to prepare for the oral hearing or trial. Oral hearing (prevalent in civil law): The parties argue the merits of the case at an oral hearing before the judge. Witnesses and a court-appointed independent expert may be heard and questioned at the oral hearing. Final arguments: The parties present their final factual and legal arguments to the court either by oral presentation or by a written submission. Judgment date: The judge sets a date for delivery of the judgment. Notification of judgment in court: The parties are notified of the judgment at a court hearing. Writing of judgment: The judge produces a written copy of the judgment. Registration of judgment: The court office registers the judgment after receiving a written copy of the judgment. Court notification of availability of the written judgment: The court notifies the parties that the written judgment is available at the courthouse. Plaintiff's receipt of a copy of written judgment: Plaintiff receives a copy of the written judgment. Notification of Defendant of judgment: Plaintiff or court formally notifies the Defendant of the judgment. The appeal period starts to run the day the Defendant is formally notified of the judgment. Appeal period: By law, Defendant has the opportunity to appeal the judgment during a period specified in the law. Defendant decides not to appeal. Judgment becomes final the day the appeal period ends. Reimbursement by Defendant of Plaintiff's court fees: The judgment obliges Defendant to reimburse Plaintiff for the court fees Plaintiff has advanced, because Defendant has lost the case. Enforcement of judgment:
10 * * 11 12 13 * 14 15 16 17 18 19 20 21 22
Plaintiffs hiring of lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be represented by a lawyer during the enforcement of judgment phase.
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No. 23 * 24 25 *
Procedure Plaintiff's approaching of court enforcement officer or (private) bailiff to enforce the judgment: To enforce the judgment, Plaintiff approaches a court enforcement officer such as a court bailiff or sheriff, or a private bailiff. Plaintiffs request for enforcement order: Plaintiff applies to the court to obtain the enforcement order ('seal' on judgment). Plaintiffs advancement of enforcement fees: Plaintiff pays the fees related to the enforcement of the judgment. Attachment of enforcement order to judgment: The judge attaches the enforcement order (seal) to the judgment. Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer or a (private) bailiff. Request to Defendant to comply voluntarily with judgment: Plaintiff, a court enforcement officer or a (private) bailiff requests Defendant to voluntarily comply with the judgment, giving Defendant a last chance to comply voluntarily with the judgment. Identification of Defendant's assets for attachment by court official or Defendant: Judge, a court enforcement officer, a (private) bailiff or the Defendant himself identifies Defendant's movable assets for attachment. Contestation of selection of assets identified for attachment: The party, Plaintiff or Defendant, who was not involved in the designation of the assets to be attached, contests the selection of assets for attachment. Plaintiffs identification of Defendant's assets for attachment: Plaintiff identifies Defendant's assets for attachment. Notification of intent to attach: A court enforcement officer or (private) bailiff notifies other creditors of the intent to attach Defendant's goods. Attachment: Defendants movable goods are attached (physically or by registering, marking or separating assets). Valuation or appraisal of attached movable goods: The court or court appointed valuation expert evaluates the attached goods. Enforcement disputes before court: The enforcement of the judgment is delayed because Defendant opposes aspects of the enforcement process before the judge. Call for public auction: The judge calls a public auction by, for example, advertising or publication in the newspapers. Sale through public auction: The Defendants movable property is sold at public auction. Judge's decision on bids: The judge determines the adequacy of the bids presented at public auction. Distribution of proceeds: The proceeds of the public auction are distributed to various creditors (including Plaintiff), according to the rules of priority. Reimbursement of Plaintiffs enforcement fees: Defendant reimburses Plaintiff's enforcement fees which Plaintiff had advanced previously. Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff.
26
27 28 29 30 31 32 33 34 35 36 37 38 39
Doing Business 2013
Bulgaria
97
RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter, ensuring the survival of economically efficient companies and reallocating the resources of inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of businesses to normal operation and increase returns to creditors. By improving the expectations of creditors and debtors about the outcome of insolvency proceedings, well-functioning insolvency systems can facilitate access to finance, save more viable businesses and thereby improve growth and sustainability in the economy overall. What do the indicators cover? Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic entities. It does not measure insolvency proceedings of individuals and financial institutions. The data are derived from survey responses by local insolvency practitioners and verified through a study of laws and regulations as well as public information on bankruptcy systems. The ranking on the ease of resolving insolvency is based on the recovery rate, which is recorded as cents on the dollar recouped by creditors through reorganization, liquidation or debt enforcement (foreclosure) proceedings. The recovery rate is a function of time, cost and other factors, such as lending rate and the likelihood of the company continuing to operate. To make the data comparable across economies, Doing Business uses several assumptions about the business and the case. It assumes that the company: Is a domestically owned, limited liability company operating a hotel. Operates in the economys largest business city. WHAT THE RESOLVING INSOLVENCY INDICATORS MEASURE Time required to recover debt (years) Measured in calendar years Appeals and requests for extension are included Cost required to recover debt (% of debtors estate) Measured as percentage of estate value Court fees Fees of insolvency administrators Lawyers fees Assessors and auctioneers fees Other related fees Recovery rate for creditors (cents on the dollar) Measures the cents on the dollar recovered by creditors Present value of debt recovered Official costs of the insolvency proceedings are deducted Depreciation of furniture is taken into account Outcome for the business (survival or not) affects the maximum value that can be recovered
Has 201 employees, 1 main secured creditor and 50 unsecured creditors. Has a higher value as a going concernand the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation.
Doing Business 2013
Bulgaria
98
RESOLVING INSOLVENCY Where does the economy stand today?

Speed, low costs and continuation of viable businesses characterize the top-performing economies. How efficient are insolvency proceedings in Bulgaria? According to data collected by Doing Business, resolving insolvency takes 3.3 years on average and costs 9% of the debtors estate, with the most likely outcome being that the company will be sold as piecemeal sale. The average recovery rate is 31.7 cents on the dollar. Globally, Bulgaria stands at 93 in the ranking of 185 economies on the ease of resolving insolvency (figure 11.1). The rankings for comparator economies and the regional average ranking provide other useful benchmarks for assessing the efficiency of insolvency proceedings in Bulgaria.
Figure 11.1 How Bulgaria and comparator economies rank on the ease of resolving insolvency
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RESOLVING INSOLVENCY What are the changes over time?

While the most recent Doing Business data reflect the efficiency of insolvency proceedings in Bulgaria today, data over time show where the efficiency has changedand where it has not (table 11.1). That can help identify where the potential for improvement is greatest.
Table 11.1 The ease of resolving insolvency in Bulgaria over time By Doing Business report year Indicator Rank Time (years) Cost (% of estate) Recovery rate (cents on the dollar) DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 .. 3.3 9 .. 3.3 9 .. 3.3 9 .. 3.3 9 .. 3.3 9 .. 3.3 9 .. 3.3 9 .. 3.3 9 94 3.3 9 93 3.3 9
33.8
33.5
33.5
34.4
32.4
32.1
32.1
31.0
31.4
31.7
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last years published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. No practice indicates that in each of the previous 5 years the economy had no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for no practice economies is 0. Source: Doing Business database.
Doing Business 2013
Bulgaria
100
Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the time or cost of insolvency proceedings or on the recovery rate (figure 11.2). These benchmarks help show what is possible in improving the efficiency of insolvency proceedings. And changes in regional averages can show where Bulgaria is keeping upand where it is falling behind.
Figure 11.2 Has resolving insolvency become easier over time? Time (years)
Cost (% of estate)
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Recovery rate (cents on the dollar)
Note: Regional averages on time and cost exclude economies with a no practice mark. Source: Doing Business database.
Doing Business 2013
Bulgaria
102
A well-balanced bankruptcy system distinguishes companies that are financially distressed but economically viable from inefficient companies that should be liquidated. But in some insolvency systems even viable businesses are liquidated. This is starting to change. Many recent reforms of bankruptcy laws have been aimed at helping more of the viable businesses survive. What insolvency reforms has Doing Business recorded in Bulgaria (table 11.2)?
Table 11.2 How has Bulgaria made resolving insolvency easieror not? By Doing Business report year DB year DB2008 Reform No reform as measured by Doing Business. Bulgaria passed 2 laws: the Civil Procedure Code and the Law for the Commercial Registry. The Civil Procedure Code specifies that the Supreme Cassation Court has the discretion to decide whether or not to hear a case. The Law for Commercial Registry specifies that major decisions and rulings of the bankruptcy court are posted on the commercial registrys website. These changes are expected to reduce delays and allows for faster resolution of bankruptcy. No reform as measured by Doing Business. No reform as measured by Doing Business. Bulgaria amended its commerce act to extend further rights to secured creditors and increase the transparency of insolvency proceedings. No reform as measured by Doing Business.
DB2009
DB2010 DB2011 DB2012 DB2013
Doing Business 2013
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EMPLOYING WORKERS
Doing Business measures flexibility in the regulation of employment, specifically as it affects the hiring and redundancy of workers and the rigidity of working hours. From 2007 to 2011 improvements were made to align the methodology for the employing workers indicators with the letter and spirit of the International Labour Organization (ILO) conventions. Only 4 of the 188 ILO conventions cover areas measured by Doing Business: employee termination, weekend work, holiday with pay and night work. The Doing Business methodology is fully consistent with these 4 conventions. The ILO conventions covering areas related to the employing workers indicators do not include the ILO core labor standards8 conventions covering the right to collective bargaining, the elimination of forced labor, the abolition of child labor and equitable treatment in employment practices. Between 2009 and 2011 the World Bank Group worked with a consultative groupincluding labor lawyers, employer and employee representatives, and experts from the ILO, the Organisation for Economic Cooperation and Development, civil society and the private sectorto review the employing workers methodology and explore future areas of research. A full report with the conclusions of the consultative group is available at http://www.doingbusiness.org/ methodology/employing-workers. Doing Business 2013 does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ranking on the ease of doing business. The report does present the data on the employing workers indicators in an annex. Detailed data collected on labor regulations are available on the Doing Business website (http://www.doing business.org). Particular data for Bulgaria are presented here without scoring. To make the data on employing workers comparable across economies, several assumptions about the worker and the business are used. The worker: Earns a salary plus benefits equal to the economys average wage during the entire period of his employment. Has a pay period that is the most common for workers in the economy. Is a lawful citizen who belongs to the same race and religion as the majority of the economys population. Resides in the economys largest business city. Is not a member of a labor union, unless membership is mandatory.
The business: Is a limited liability company. Operates in the economys largest business city. Is 100% domestically owned. Operates in the manufacturing sector. Has 60 employees. Is subject to collective bargaining agreements in economies where such agreements cover more than half the manufacturing sector and apply even to firms not party to them. Abides by every law and regulation but does not grant workers more benefits than mandated by law, regulation or (if applicable) collective bargaining agreement.
Doing Business 2013
Bulgaria
104
EMPLOYING WORKERS What do some of the data show?

One of the employing workers indicators is the difficulty of hiring index. This measure assesses, among other things, the minimum wage for a 19-year-old worker in his or her first job. Doing Business data show the trend in the minimum wage applied by Bulgaria (figure 12.1).
Figure 12.1 Has the minimum wage for a 19-year-old worker or an apprentice increased over time? Minimum wage (US$ per month)
Note: A horizontal line along the x-axis of the figure indicates that the economy has no minimum wage. Source: Doing Business database.
Doing Business 2013
Bulgaria
105
EMPLOYING WORKERS
Employment laws are needed to protect workers from arbitrary or unfair treatment and to ensure efficient contracting between employers and workers. Many economies that changed their labor regulations in the past 4 years did so in ways that increased labor market flexibility. What changes did Bulgaria adopt that affected the Doing Business indicators on employing workers (table 12.1)?
Table 12.1 What changes did Bulgaria make in employing workers in 2012? Reform No reform as measured by Doing Business.
Doing Business 2013
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106
EMPLOYING WORKERS What are the details?

The data on employing workers reported here for Bulgaria are based on a detailed survey of employment regulations that is completed by local lawyers and Rigidity of employment index The rigidity of employment index measures 3 areas of labor regulation: difficulty of hiring, rigidity of hours and difficulty of redundancy. public officials. Employment laws and regulations as well as secondary sources are reviewed to ensure accuracy.
Difficulty of hiring index The difficulty of hiring index measures whether fixedterm contracts are prohibited for permanent tasks; the maximum cumulative duration of fixed-term contracts; and the ratio of the minimum wage for a trainee or first-time employee to the average value added per Difficulty of hiring index Fixed-term contracts prohibited for permanent tasks? Maximum length of a single fixed-term contract (months) Maximum length of fixed-term contracts, including renewals (months) Minimum wage for a 19-year old worker or an apprentice (US$/month) Ratio of minimum wage to value added per worker
worker. (The average value added per worker is the ratio of an economys gross national income per capita to the working-age population as a percentage of the total population.)
Data No 36 - Art. 68 of the Labour Code 36 197.0 0.25
Doing Business 2013
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EMPLOYING WORKERS
Rigidity of hours index The rigidity of hours index has 5 components: whether there are restrictions on night work; whether there are restrictions on weekly holiday work; whether the workweek can consist of 5.5 days or is more than 6 days; whether the workweek can extend to 50 hours or more (including overtime) for 2 months a year to respond to a seasonal increase in production; and whether the average paid annual leave for a worker with 1 year of tenure, a worker with 5 years and a worker with 10 years is more than 26 working days or fewer than 15 working days.
Rigidity of hours index Standard workday in manufacturing (hours) 50-hour workweek allowed for 2 months a year in case of a seasonal increase in production? Maximum working days per week Premium for night work (% of hourly pay) in case of continuous operations Premium for work on weekly rest day (% of hourly pay) in case of continuous operations Major restrictions on night work in case of continuous operations? Major restrictions on weekly holiday in case of continuous operations? Paid annual leave for a worker with 1 year of tenure (in working days) Paid annual leave for a worker with 5 years of tenure (in working days) Paid annual leave for a worker with 10 years of tenure (in working days) Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days)
Data 8 hours Yes 6.0 10% 0% Yes No 20.0 20.0 20.0 20.0
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EMPLOYING WORKERS
Difficulty of redundancy index The difficulty of redundancy index has 8 components: whether redundancy is disallowed as a basis for terminating workers; whether the employer needs to notify a third party (such as a government agency) to terminate 1 redundant worker; whether the employer needs to notify a third party to terminate a group of 9 redundant workers; whether the employer needs approval from a third party to terminate 1 redundant worker; whether the employer needs approval from a third party to terminate a group of 9 redundant workers; whether the law requires the employer to reassign or retrain a worker before making the worker redundant; whether priority rules apply for redundancies; and whether priority rules apply for reemployment.
Difficulty of redundancy index Dismissal due to redundancy allowed by law? Third-party notification if 1 worker is dismissed? Third-party approval if 1 worker is dismissed? Third-party notification if 9 workers are dismissed? Third-party approval if 9 workers are dismissed? Retraining or reassignment obligation before redundancy? Priority rules for redundancies? Priority rules for reemployment?
Data Yes No No No No No No No
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EMPLOYING WORKERS
Redundancy cost The redundancy cost indicator measures the cost of advance notice requirements, severance payments and penalties due when terminating a redundant worker, expressed in weeks of salary. The average value of notice requirements and severance payments applicable to a worker with 1 year of tenure, a worker with 5 years and a worker with 10 years is used to assign the score.
Redundancy cost indicator Notice period for redundancy dismissal (for a worker with 1 year of tenure, in salary weeks) Notice period for redundancy dismissal (for a worker with 5 years of tenure, in salary weeks) Notice period for redundancy dismissal (for a worker with 10 years of tenure, in salary weeks) Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in salary weeks) Severance pay for redundancy dismissal (for a worker with 1 year of tenure, in salary weeks) Severance pay for redundancy dismissal (for a worker with 5 years of tenure, in salary weeks) Severance pay for redundancy dismissal (for a worker with 10 years of tenure, in salary weeks) Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in salary weeks)
Data 4.3 4.3 4.3 4.3 4.3 1.0 4.3 3.2
Doing Business 2013
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DATA NOTES
The indicators presented and analyzed in Doing Business measure business regulation and the protection of property rightsand their effect on businesses, especially small and medium-size domestic firms. First, the indicators document the complexity of regulation, such as the number of procedures to start a business or to register and transfer commercial property. Second, they gauge the time and cost of achieving a regulatory goal or complying with regulation, such as the time and cost to enforce a contract, go through bankruptcy or trade across borders. Third, they measure the extent of legal protections of property, for example, the protections of investors against looting by company directors or the range of assets that can be used as collateral according to secured transactions laws. Fourth, a set of indicators documents the tax burden on businesses. Finally, a set of data covers different aspects of employment regulation. The data for all sets of indicators in Doing Business 2 2013 are for June 2012. ECONOMY CHARACTERISTICS
Gross national income per capita Doing Business 2013 reports 2011 income per capita as published in the World Banks World Development Indicators 2012. Income is calculated using the Atlas method (current US$). For cost indicators expressed as a percentage of income per capita, 2011 gross national income (GNI) in U.S. dollars is used as the denominator. GNI data were not available from the World Bank for Afghanistan; Australia; The Bahamas; Bahrain; Barbados; Brunei Darussalam; Cyprus; Djibouti; Guyana; the Islamic Republic of Iran; Kuwait; Malta; New Zealand; Oman; Puerto Rico (territory of the United States); Sudan; Suriname; the Syrian Arab Republic; Timor-Leste; West Bank and Gaza; and the Republic of Yemen. In these cases GDP or GNP per capita data and growth rates from the International Monetary Funds World Economic Outlook database and the Economist Intelligence Unit were used. Region and income group Doing Business uses the World Bank regional and income group classifications, available at http://data.worldbank.org/about/countryclassifications. The World Bank does not assign regional classifications to high-income economies. For the purpose of the Doing Business report, highincome OECD economies are assigned the regional classification OECD high income. Figures and tables presenting regional averages include economies from all income groups (low, lower middle, upper middle and high income). Population Doing Business 2013 reports midyear 2011 population statistics as published in World Development Indicators 2012. The Doing Business methodology offers several advantages. It is transparent, using factual information about what laws and regulations say and allowing multiple interactions with local respondents to clarify potential misinterpretations of questions. Having
Methodology
The Doing Business data are collected in a standardized way. To start, the Doing Business team, with academic advisers, designs a questionnaire. The questionnaire uses a simple business case to ensure comparability across economies and over time with assumptions about the legal form of the business, its size, its location and the nature of its operations. Questionnaires are administered through more than 9,600 local experts, including lawyers, business consultants, accountants, freight forwarders, government officials and other professionals routinely administering or advising on legal and regulatory requirements. These experts have several rounds of interaction with the Doing Business team, involving conference calls, written correspondence and visits by the team. For Doing Business 2013 team members visited 24 economies to verify data and recruit respondents. The data from questionnaires are subjected to numerous rounds of verification, leading to revisions or expansions of the information collected.
2
The data for paying taxes refer to January December 2011.
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representative samples of respondents is not an issue; Doing Business is not a statistical survey, and the texts of the relevant laws and regulations are collected and answers checked for accuracy. The methodology is inexpensive and easily replicable, so data can be collected in a large sample of economies. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. Finally, the data not only highlight the extent of specific regulatory obstacles to business but also identify their source and point to what might be reformed. Information on the methodology for each Doing Business topic can be found on the Doing Business website at http://www.doingbusiness.org/methodology/.
2013 would differ from the recollection of entrepreneurs reported in the World Bank Enterprise Surveys or other perception surveys.
Subnational Doing Business indicators

This year Doing Business completed subnational studies for Indonesia, Kenya, Mexico, the Russian Federation and the United Arab Emirates. Each of these countries had already asked to have subnational data in the past, and this year Doing Business updated the indicators, measured improvements over time and expanded geographic coverage to additional cities or added additional indicators. Doing Business also published regional studies for the Arab world, the East African Community and member states of the Organization for the Harmonization of Business Law in Africa (OHADA). The subnational studies point to differences in business regulation and its implementation as well as in the pace of regulatory reformacross cities in the same economy. For several economies subnational studies are now periodically updated to measure change over time or to expand geographic coverage to additional cities. This year that is the case for all the subnational studies published.
Limits to what is measured

The Doing Business methodology has 5 limitations that should be considered when interpreting the data. First, the collected data refer to businesses in the economys largest business city (which in some economies differs from the capital) and may not be representative of regulation in other parts of the economy. To address this limitation, subnational Doing Business indicators were created (see the section on subnational Doing Business indicators). Second, the data often focus on a specific business formgenerally a limited liability company (or its legal equivalent) of a specified size and may not be representative of the regulation on other businesses, for example, sole proprietorships. Third, transactions described in a standardized case scenario refer to a specific set of issues and may not represent the full set of issues a business encounters. Fourth, the measures of time involve an element of judgment by the expert respondents. When sources indicate different estimates, the time indicators reported in Doing Business represent the median values of several responses given under the assumptions of the standardized case. Finally, the methodology assumes that a business has full information on what is required and does not waste time when completing procedures. In practice, completing a procedure may take longer if the business lacks information or is unable to follow up promptly. Alternatively, the business may choose to disregard some burdensome procedures. For both reasons the time delays reported in Doing Business
Changes in what is measured

The ranking methodology for paying taxes was updated this year. The threshold for the total tax rate introduced last year for the purpose of calculating the ranking on the ease of paying taxes was updated. All economies with a total tax rate below the threshold (which is calculated and adjusted on a yearly basis) receive the same ranking on the total tax rate indicator. The threshold is not based on any economic theory of an optimal tax rate that minimizes distortions or maximizes efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company because they raise public revenue in other waysfor example, through
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taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). Giving the same ranking to all economies whose total tax rate is below the threshold avoids awarding economies in the scoring for having an unusually low total tax rate, often for reasons unrelated to government policies toward enterprises. For example, economies that are very small or that are rich in natural resources do not need to levy broadbased taxes.
investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. The employing workers indicators are not included in this years aggregate ease of doing business ranking. In addition to this years ranking, Doing Business presents a comparable ranking for the previous year, adjusted for any changes in methodology as well as additions of 3 economies or topics. Construction of the ease of doing business index Here is one example of how the ease of doing business index is constructed. In Finland it takes 3 procedures, 14 days and 4% of annual income per capita in fees to register a property. On these 3 indicators Finland ranks in the 6th, 16th and 39th percentiles. So on average Finland ranks in the 20th percentile on the ease of registering property. It ranks in the 30th percentile on th starting a business, 28 percentile on getting credit, 24th percentile on paying taxes, 13th percentile on enforcing contracts, 5th percentile on trading across borders and so on. Higher rankings indicate simpler regulation and stronger protection of property rights. The simple average of Finlands percentile rankings on all topics is 21st. When all economies are ordered by their average percentile rankings, Finland stands at 11 in the aggregate ranking on the ease of doing business. More complex aggregation methodssuch as principal components and unobserved components yield a ranking nearly identical to the simple average 4 used by Doing Business. Thus, Doing Business uses the simplest method: weighting all topics equally and,
Data challenges and revisions

Most laws and regulations underlying the Doing Business data are available on the Doing Business website at http://www.doingbusiness.org. All the sample questionnaires and the details underlying the indicators are also published on the website. Questions on the methodology and challenges to data can be submitted through the websites Ask a Question function at http://www.doingbusiness.org.
Ease of doing business and distance to frontier

Doing Business 2013 presents results for 2 aggregate measures: the aggregate ranking on the ease of doing business and the distance to frontier measure. The ease of doing business ranking compares economies with one another, while the distance to frontier measure benchmarks economies to the frontier in regulatory practice, measuring the absolute distance to the best performance on each indicator. Both measures can be used for comparisons over time. When compared across years, the distance to frontier measure shows how much the regulatory environment for local entrepreneurs in each economy has changed over time in absolute terms, while the ease of doing business ranking can show only relative change. Ease of doing business The ease of doing business index ranks economies from 1 to 185. For each economy the ranking is calculated as the simple average of the percentile rankings on each of the 10 topics included in the index in Doing Business 2013: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting
In case of revisions to the methodology or corrections to the underlying data, the data are back-calculated to provide a comparable time series since the year the relevant economy or topic was first included in the data set. The time series is available on the Doing Business website (http://www.doingbusiness.org). Six topics and more than 50 economies have been added since the inception of the project. Earlier rankings on the ease of doing business are therefore not comparable. 4 See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita Ramalho, Doing Business Indicators: Why Aggregate, and How to Do It (World Bank, Washington, DC, 2005). Principal components and unobserved components methods yield a ranking nearly identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the pairwise correlations among indicators do not differ much. An alternative to the simple average method is to give different weights to the topics, depending on which are considered of more or less importance in the context of a specific economy.
3
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within each topic, giving equal weight to each of the 5 topic components. If an economy has no laws or regulations covering a specific areafor example, insolvencyit receives a no practice mark. Similarly, an economy receives a no practice or not possible mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a no practice mark puts the economy at the bottom of the ranking on the relevant indicator. The ease of doing business index is limited in scope. It does not account for an economys proximity to large markets, the quality of its infrastructure services (other than services related to trading across borders and getting electricity), the strength of its financial system, the security of property from theft and looting, macroeconomic conditions or the strength of underlying institutions. Variability of economies rankings across topics Each indicator set measures a different aspect of the business regulatory environment. The rankings of an economy can vary, sometimes significantly, across indicator sets. The average correlation coefficient between the 10 indicator sets included in the aggregate ranking is 0.37, and the coefficients between any 2 sets of indicators range from 0.19 (between dealing with construction permits and getting credit) to 0.60 (between starting a business and protecting investors). These correlations suggest that economies rarely score universally well or universally badly on the indicators. Consider the example of Canada. It stands at 17 in the aggregate ranking on the ease of doing business. Its ranking is 3 on starting a business, and 4 on both resolving insolvency and protecting investors. But its ranking is only 62 on enforcing contracts, 69 on dealing with construction permits and 152 on getting electricity. Variation in performance across the indicator sets is not at all unusual. It reflects differences in the degree of priority that government authorities give to particular areas of business regulation reform and the
ability of different government agencies to deliver tangible results in their area of responsibility. Economies that improved the most across 3 or more Doing Business topics in 2011/12 Doing Business 2013 uses a simple method to calculate which economies improved the most in the ease of doing business. First, it selects the economies that in 2011/12 implemented regulatory reforms making it easier to do business in 3 or more of the 10 topics 6 included in this years ease of doing business ranking. Twenty-three economies meet this criterion: Benin, Burundi, Costa Rica, the Czech Republic, Georgia, Greece, Guinea, Kazakhstan, Korea, the Lao Peoples Democratic Republic, Liberia, Mongolia, the Netherlands, Panama, Poland, Portugal, Serbia, the Slovak Republic, Slovenia, Sri Lanka, Ukraine, the United Arab Emirates and Uzbekistan. Second, Doing Business ranks these economies on the increase in their ranking on the ease of doing business from the previous year using comparable rankings. Selecting the economies that implemented regulatory reforms in at least 3 topics and improved the most in the aggregate ranking is intended to highlight economies with ongoing, broad-based reform programs. Distance to frontier measure A drawback of the ease of doing business ranking is that it can measure the regulatory performance of economies only relative to the performance of others. It does not provide information on how the absolute quality of the regulatory environment is improving over time. Nor does it provide information on how large the gaps are between economies at a single point in time. The distance to frontier measure is designed to address both shortcomings, complementing the ease of doing business ranking. This measure illustrates the distance of an economy to the frontier, and the change in the measure over time shows the extent to which the economy has closed this gap. The frontier is a score derived from the most efficient practice or highest score achieved on each of the component indicators in 9 Doing Business indicator sets (excluding
6
A technical note on the different aggregation and weighting methods is available on the Doing Business website (http://www.doingbusiness.org).
Doing Business reforms making it more difficult to do business are subtracted from the total number of those making it easier to do business.
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the employing workers and getting electricity indicators) by any economy since 2005. In starting a business, for example, New Zealand has achieved the highest performance on the time (1 day), Canada and New Zealand on the number of procedures required (1), Slovenia on the cost (0% of income per capita) and Australia and 90 other economies on the paid-in minimum capital requirement (0% of income per capita). Calculating the distance to frontier for each economy involves 2 main steps. First, individual indicator scores are normalized to a common unit: except for the total tax rate. To do so, each of the 28 component indicators y is rescaled to (max y)/(max min), with the minimum value (min) representing the frontierthe highest performance on that indicator across all economies since 2005. For the total tax rate, consistent with the calculation of the rankings, the frontier is defined as the total tax rate corresponding th to the 15 percentile based on the overall distribution of total tax rates for all years. Second, for each economy the scores obtained for individual indicators are aggregated through simple averaging into one distance to frontier score. An economys distance to frontier is indicated on a scale from 0 to 100, where 0 represents the lowest performance and 100 the frontier. The difference between an economys distance to frontier score in 2005 and its score in 2012 illustrates the extent to which the economy has closed the gap to the frontier over time. And in any given year the score measures how far an economy is from the highest performance at that time.
The maximum (max) and minimum (min) observed values are computed for the 174 economies included in the Doing Business sample since 2005 and for all years (from 2005 to 2012). The year 2005 was chosen as the baseline for the economy sample because it was the first year in which data were available for the majority of economies (a total of 174) and for all 9 indicator sets included in the measure. To mitigate the effects of extreme outliers in the distributions of the rescaled data (very few economies need 694 days to complete the procedures to start a business, but many th need 9 days), the maximum (max) is defined as the 95 percentile of the pooled data for all economies and all years for each indicator. The exceptions are the getting credit, protecting investors and resolving insolvency indicators, whose construction precludes outliers. Take Ghana, which has a score of 67 on the distance to frontier measure for 2012. This score indicates that the economy is 33 percentage points away from the frontier constructed from the best performances across all economies and all years. Ghana was further from the frontier in 2005, with a score of 54. The difference between the scores shows an improvement over time. The distance to frontier measure can also be used for comparisons across economies in the same year, complementing the ease of doing business ranking. For example, Ghana stands at 64 this year in the ease of doing business ranking, while Peru, which is 29 percentage points from the frontier, stands at 43.
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RESOURCES ON THE DOING BUSINESS WEBSITE

Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rankfrom 1 to 185 http://www.doingbusiness.org/rankings/ Data All the data for 185 economiestopic rankings, indicator values, lists of regulatory procedures and details underlying indicators http://www.doingbusiness.org/data/ Reports Access to Doing Business reports as well as subnational and regional reports, reform case studies and customized economy and regional profiles http://www.doingbusiness.org/reports/ Methodology The methodologies and research papers underlying Doing Business http://www.doingbusiness.org/methodology/ Research Abstracts of papers on Doing Business topics and related policy issues http://www.doingbusiness.org/research/ Doing Business reforms Short summaries of DB2013 business regulation reforms, lists of reforms since DB2008 and a ranking simulation tool http://www.doingbusiness.org/reforms/ Historical data Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Law library Online collection of business laws and regulations relating to business and gender issues http://www.doingbusiness.org/law-library/ http://wbl.worldbank.org/ Contributors More than 9,600 specialists in 185 economies who participate in Doing Business http://www.doingbusiness.org/contributors/doingbusiness/ NEW! Entrepreneurship data Data on business density for 130 economies http://www.doingbusiness.org/data/exploretopics/e ntrepreneurship More to come Coming sooninformation on good practices and data on transparency and on the distance to frontier
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St. Bulgaria: Economy

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Economy Profile: Bulgaria

Doing Business 2013

Doing Business 2013

Doing Business 2013

Doing Business 2013

THE BUSINESS ENVIRONMENT

Doing Business 2013

THE BUSINESS ENVIRONMENT

Source: Doing Business database.

Doing Business 2013

THE BUSINESS ENVIRONMENT

Source: Doing Business database.

Doing Business 2013

THE BUSINESS ENVIRONMENT

Source: Doing Business database.

Doing Business 2013

THE BUSINESS ENVIRONMENT

Doing Business 2013

THE BUSINESS ENVIRONMENT

Table 1.1 Summary of Doing Business indicators for Bulgaria

New Zealand (1)

New Zealand (1)* New Zealand (1) Slovenia (0.0)

Best performer globally DB2013

Czech Republic DB2013

Doing Business 2013

Slovak Republic DB2013

128 6 130 340.7

125 6 130 366.6

143 6 279 180.0

109 5 252 116.9

137 6 186 208.3

168 7 223 584.2

100 5 158 249.1

Iceland (1) Germany (3)* Germany (17) Japan (0.0)

United Kingdom (6)*

Portugal (90.7) United Kingdom (100.0)* New Zealand (1)

Hong Kong SAR,

Best performer globally DB2013

Czech Republic DB2013

Doing Business 2013

Slovak Republic DB2013

New Zealand (10)*

France (2) Singapore (5)*

France (2) Singapore (4) Malaysia (420)

Best performer globally DB2013

Czech Republic DB2013

Doing Business 2013

Slovak Republic DB2013

86 564 23.8 39 93 3.3 9

88 564 23.8 39 94 3.3 9

79 611 33.0 27 34 3.2 17

87 819 14.4 39 50 2.0 9

16 395 15.0 35 70 2.0 15

56 685 19.0 33 37 3.0 15

60 512 28.9 32 102 3.3 11

69 545 30.0 32 38 4.0 18

Best performer globally DB2013

Czech Republic DB2013