A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

h o m e p a g e : w w w . a m c h a m . b g e - m a i l : a m c h a m @a m c h a m . b gBus in e s s Pa rk So f i a , M lado s t 4 A re a , Bu i l d ing 2 , F l o o r 6 , 1 7 6 6 So f i a

Te l . : ( 3 5 9 2 ) 97 4 2 7 4 3 Fax : ( 3 5 9 2 ) 97 4 2 7 41

AmCham events:AmCham events:

Celebrating 4th of July Celebrating 4th of July for the twentieth time for the twentieth time Business Breakfast Business Breakfast with Deloitte Bulgariawith Deloitte Bulgaria

Fift y Meetings at the Fift y Meetings at the M2M EventM2M Event

Analyses:Analyses:

The Inevitable Hillar y?The Inevitable Hillar y?

Agricultural Sector and Agricultural Sector and the EU Fundsthe EU Funds

A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

Bus in e s s Pa rk So f i a M lado s t 4 A re a Bu i l d ing 2 F lo o r 6 1 7 6 6 So f i a

The Greek Crisis The Greek Crisis Effect on Bulgaria Effect on Bulgaria

i s s u e 1 6 1j u l y 2 0 1 5

1p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

e d i t o r i a l

As I was writing my address, Greece and its creditors were busy announcing an agree-ment aimed at resolving the debt crisis and keeping the country in the Eurozone. This, of course, would require further budgetary restrictions and Prime Minister Alexis Tzipras may have a hard time selling the plan back in Athens. Yet the Greek crisis, although creating troubles and making life difficult for the ordinary people, has not affected the tourism much.

It turned out that this is a great time for tourists and holidaymakers to be in Greece. When you will be reading this magazine the situation may have other dynamics, of course, but for the moment there are no worries to travel and visit this magnificent country. Its people are hospitable and they do everything possible to make your holiday an exceptional experience. The country’s tourism industry accounts for some 20 percent of GDP and the Greeks deserve applauses for the way they run the business in this sector.

At any rate, the Greek crisis will have a certain impact on Bulgaria. The article by Marina Tsvetkova deals with the effects of the crisis here and what possible solutions can be taken to minimize the potential negative consequences. You can also enjoy an article of our Deputy Editor-in-Chief Christopher Karadjov on the candidacy of Hilary Clinton for the U.S. presidential elections of 2016; it prepares us well in advance for the hot political season in America next year.

You will also read in this issue about many other events and activities run by AmCham and its members. The most spectacular for our community was the Independence Day party on July 4th, which certainly turned out to be an excellent start for the summer vacations.

Enjoy a happy holiday season!

Best regards,

Valentin GeorgievExecutive Director

Dear members and friends,

c o n t e n t s

2

Publisher American Chamber of Commerce in BulgariaBusiness Park Sofia, Mladost 4 AreaBuilding 2, Floor 6, Sofia 1766, BulgariaTel.: +359 (2) 9742 743Fax: +359 (2) 9742 741e-mail: amcham@amcham.bgwww.amcham.bg

Editor-in-ChiefMilen Marchev

Deputy Editor-in-ChiefChristopher Karadjov

Senior Editor:Irina Bacheva

ISSN 1312-935X

Writers:Boyko Vassilev, Marina Tzvetkova, Mina Georgieva, Panayot Angarev, Yuliana Boncheva

AdvertisingAmCham Bulgaria: Nadejda Vakareeva, nadia@amcham.bg

AmCham Bulgaria Magazine:Milen Marchev, milen@milenmarchev.com

The AmCham Bulgaria Magazine reaches a broad audi-ence of AmCham members, leading US, Bulgarian and international companies, US and Bulgarian decision-mak-ers, all AmChams around the world.Subscription is free of charge. If you would like to sub-scribe to AmCham Bulgaria publications, please contact the AmCham Bulgaria office.

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business opportunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American Chamber of Commerce in Bulgaria.

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

3p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

a m c h a m b u l g a r i a

Contents4 t h j u l y

AmCham Invites 3,000 to

Celebrate Fourth of July . . . . . . . . . . . . . . . . . . . 4

Taking Everyone’s Expectations

to New Heights!. . . . . . . . . . . . . . . . . . . . . . . . . 8

a n a l y s i s

Greece’s “No” Reverberates in Bulgaria . . . . . . . . .10

By Marina Tsvetkova

The Value Added in the Agricultural Sector

Decreases in Spite of the EU Funds. . . . . . . . . . . .14

The Inevitable Hillary? . . . . . . . . . . . . . . . . . . . 16

By Christopher Karadjov, Special to AmCham Bulgaria Magazine

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . . 17

ASSESS Ltd.

Hydroenergy Company JSC (HEC)

a m c h a m e v e n t s

Mutual Agreement Procedure

as a Tool to Resolve Double Taxation. . . . . . . . . . .18

By Alexandar Stefanov, Tax Manager, Deloitte Bulgaria

Speed-dating for Businesses

Proves Successful . . . . . . . . . . . . . . . . . . . . . . .20

AmCham Submits Proposals for the

Draft New Public Procurement Act . . . . . . . . . . . .21

Chambers Celebrate Anniversary,

Discuss TTIP . . . . . . . . . . . . . . . . . . . . . . . . . .22

Four Business Associations Gather

at One More Summer Party . . . . . . . . . . . . . . . . .24

3M Bulgaria EOOD . AA KRES EOOD . Abbott Products EOOD . AbbVie EOOD . Actavis Bulgaria EAD . Adecco Bulgaria ltd. . ADM Bulgaria Trading EOOD . Advance International Transport EOOD . AES Corporation . AFA OOD . AGORA-IN Ltd. . AIG Europe Limited (Bulgaria Branch) . AIMS Human Capital . Albena AD . ALD Automotive OOD . All Channels Communication . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . Alpha Bank Bulgaria . America for Bulgaria Foundation . American College of Sofia . American English Academy . American Research Center in Sofia . American University in Bulgaria (AUBG) . Amgen Bulgaria EOOD . Amway Romania Marketing Srl. . Anglo-American School of Sofia . AON Bulgaria . APOLO Ltd. . Architect Nikolay Mihaylov Galabov . Arexim Engineering . Ashtrom International Ltd. . ASSESS Ltd. . Association Srednogorie Copper Industrial Cluster . Astra Zeneca Bulgaria EOOD . AT Engineering 2000 Ltd. . Atlantic Club Bulgaria . Atos IT Solutions and Services EOOD . Attica Media Bulgaria Ltd. . August Research . Aurubis Bulgaria AD . Auto Bavaria Ltd. . AVON Cosmetics Bulgaria . AW-Tronics LLC . Axway Bulgaria EOOD . Baker Tilly Bulgaria . Balkan Star Automotive EOOD . Ballistic Cell Ltd. . Baxter Bulgaria EOOD . BG Radio . BICA International Ltd. . BMG Ltd. . BMW Vertiebs GmbH - Branch Bulgaria . BNP Paribas S.A. - Sofia Branch . BOYANOV & Co. . Braykov's Legal Office . British American Tobacco Bulgaria . Brown-Forman Bulgaria Ltd. . bTV Media Group . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Executive Search Association . Bulgarian Property Developments EOOD . Bulgarian-American Commission for Educational Exchange Fulbright . Bulgarian-American Credit Bank . BulPros Consulting JSC . Bulstrad Life Vienna Insurance Group . Business Intellect Ltd. . Business Park Sofia EOOD . C3i Europe EOOD . CAD R&D Centre Progress Ltd. . Carat Bulgaria . Castello Precast OOD . Center for the Study of Democracy . CEZ Bulgaria EAD . Chaos Software ltd. . Cheque Dejeuner Bulgaria Ltd. . Cisco Systems Bulgaria . Citibank Europe Plc, Bulgaria Branch . CMS Cameron McKenna LLP - Bulgaria Branch . Coca-Cola Enterprises Services Bulgaria EOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . COLLIERS International Bulgaria . Comverse Bulgaria . Congress Engineering Ltd. . Construction Management Group . Contitrans M Ltd. . ContourGlobal Maritsa East 3 AD . Curtis / Balkan Ltd. . Dalkia Bulgaria EAD . Danailov, Drenski, Nedelchev & Co. . Delchev & Partners Law Firm . Deloitte Bulgaria EOOD . denkstatt Bulgaria OOD . Deutsche Bank AG . Devin AD . DHL Express Bulgaria Ltd. . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . Dobrev & Lyutskanov Law Firm . Dr. I.S. Greenberg Medical Center . Drujba Glassworks SA . Dundee Precious Metals Inc. . DuPont Pioneer . EcoPack Bulgaria AD . Edenred Bulgaria . Ekoterm Proekt EAD . Ekotoi - Service Ltd. . Ekzotika EOOD . EL-A-Project Ltd. . Electron Progress EAD . Eli Lilly and Company . Eltrak Bulgaria Ltd. . EMC Computer Systems Austria GmbH . Emerson Process Management . EnergoService AD . Engineeringservice Sofia Ltd. . Enterprise Communications Group OOD . EOS Matrix Ltd. . EPAM Systems Bulgaria . EQE Control OOD . Ernst & Young Bulgaria EOOD . ESRI Bulgaria Ltd. . Etap Adress . Eurobank Bulgaria . Eurohold Bulgaria . European Bank for Reconstruction and Development (EBRD) . European Trade Center EOOD . Evrika Commerce Ltd. . EVS Translations Bulgaria . Expat Capital . Experian Bulgaria EAD . FairPlay International . Fama Consulting OOD . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . Forton AD . Foundation Glob@l Libraries - Bulgaria . GAEA - Green Alternative Energy Assets EAD . Galardo Real Estate . Gasstroymontaj Jsc . General Electric International . Georgiev, Todorov & Co. . Geostroy AD . Geotechmin OOD . Geotrading AD . Gi Group . GIFTA . Grand Hotel Sofia . GSK . GTC Bulgaria . Harley-Davidson Sofia . Helios Power Jsc . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia . Honeywell EOOD . Hydroenergy Company JSC (HEC) . IBM Bulgaria . ICAP Bulgaria JSC . IDC Bulgaria . Ideal Standard - Vidima AD . Incotex Group Ltd. . Industrial Holding Bulgaria . INFORMA . InterConsult Bulgaria Ltd. . Interdean Relocation Services . Interlang Ltd. . Intertek BA . Intracom Bulgaria EAD . Investbank JSC . Investor BG AD . IP Consulting Ltd. . Japan Tobacco International Bulgaria . Jobs.bg EOOD . JobTiger Ltd. . Johnson & Johnson Bulgaria EOOD . Junior Achievement Bulgaria . Kalamaris Group . Kaliakra AD . Kamenitza AD . Katilin Popov Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kempinski Hotel Marinela Sofia . Kinstellar Sofia Branch . KPMG Bulgaria OOD . LANDMARK Property Management AD . Lexim Sofia Co. Ltd. . Lindner Immobilien Management EOOD . Lirex BG Ltd. . M3 Communications Group, Inc. Hill+Knowlton Strategies Associate . Maria Vranovska, MD, MBA . Mars Incorporated Bulgaria EOOD . Marsh LLC. . MBL| Part of the CBRE Affiliate Network . Megatron EAD . Mellon Bulgaria EAD . Merck Sharp & Dohme Bulgaria . MetLife Europe Ltd. - Bulgaria Branch . Microsoft Bulgaria . Miltech Ltd. . Minstroy Holding Jsc . Mobiltel EAD . Monbat Plc. . Mondelez Bulgaria AD . Moten Sport . Moto-Pfohe Ltd. . Mr. Alex Nestor . Mr. David Hampson . Mr. Jean Talmon . Mr. Nikolay Ouzounov . Ms. Anelia Tatarova . Ms. Gergana Valova . Ms. Kalinka Kovatcheva . Ms. Margarita Radeva, CPA . Municipal Bank Plc . Musala Soft AD . NDB Ltd. . Nemetschek Bulgaria . NEXTDOOR Ltd. . Novacon Bulgaria Ltd. . Novotel Sofia . Nu Boyana Film Studios . On Bulgaria Ltd. . Oracle East Central Europe Limited - Branch Bulgaria . Orak Group Europe Ltd. . Orbit Ltd. . Panchim Ltd. . PANDA - IP Ltd. . Pedersen & Partners . Penev LLP . Penkov, Markov & Partners . Pfizer Luxembourg SARL Branch Bulgaria . Philip Morris Bulgaria EOOD . Philips Bulgaria Ltd. . PPD Bulgaria EOOD . Premier Luxury Mountain Resort . Premier Tours Ltd. . Prestige 96 AD . Provident Financial Bulgaria Ltd. . PSG Payroll Services Ltd. . PwC Bulgaria . Quintiles Bulgaria Ltd. . Radisson Blu Grand Hotel . Raiffeisen Investment Bulgaria EOOD . Red Devil Catering Plc . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Right Rental Ltd. . RSM BX Ltd. . S&T Bulgaria EOOD . Sanofi - Aventis Bulgaria EOOD . Sb Accounting and Consulting . Schenker EOOD . Schneider Electric Bulgaria . SECTRON . Sensata Technologies Bulgaria EOOD . Shell Bulgaria EAD . Sherita M Ltd. . Siemens EOOD . SIENIT Holding . Silver Ridge Power . Sitel Bulgaria EOOD . Sodexo Pass Bulgaria EOOD . Sofia Hotel Balkan . Sofita Translation Agency . Sogelife Bulgaria IJSC . Sopharma AD . Sopharma Trading JSC . Sportal.bg JSC . Stanton Chase International Bulgaria . Stefan Dimitrov, Norman Realestate Co. Ltd. . Sunfoods Bulgaria EOOD - Development Licensee of McDonald’s in Bulgaria . Sutherland Global Services Bulgaria EOOD . Synchron-S OOD . Tavex EOOD . TBI Bank EAD . TechnoLogica EAD . Telelink EAD . TELUS International Europe . The Coca-Cola Company Bulgaria . Tishman Management Company EOOD . Titan Zlatna Panega Cement . TMF Services EOOD . Tocheva & Mandazhieva Law Office . UniCredit Bulbank . UniCredit Leasing EAD . Unimasters Logistics Plc . Unique Estates . United Bulgarian Bank . Videolux Holding / Technopolis . VISA Europe . Visteon Electronics Bulgaria . VIVACOM . VMware Bulgaria EOOD . VSK Kentavar - IZ Dinamika EOOD . VUZF University Higher School of Insurance and Finance . Walltopia Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . World Courier Bulgaria Ltd. . World Transport Overseas Bulgaria Ltd. . WorleyParsons Nuclear Services JSC . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Xogito BG Ltd. . Yastrebets Hotel Wellness & SPA . Yatoto . Zlatina Ruseva-Savova, LL.M., MBA . Zobele Bulgaria EOOD .

Board of Directors of the American Chamber of Commerce in Bulgaria

President Ms. Krassimira Chemishanska Amgen Bulgaria

Vice President Mr. Alex Nestor Individual Member

Vice President Mr. Daniel Berg European Bank for Reconstruction and Development (EBRD)

Treasurer Ms. Petya Dimitrova Eurobank Bulgaria

Members Mr. Plamen Zhechev Cisco Systems Bulgaria

Mr. David Butts CMS Cameron McKenna EOOD

Ms. Diana Pazaitova Fama Consulting

Mr. George Brashnarov Nemetscheck Bulgaria

Mr. Peter Lithgow Individual Member

Mr. Sergey Koynov Forton International

Mr. Solomon Passy Atlantic Club Bulgaria

Mr. Venislav Yotov AIG Europe Limited (Bulgaria Branch)

Ex-Officio Member Mr. Thomas Bruns Senior Commercial Officer, U.S. Embassy

Executive Director Mr. Valentin Georgiev

4 t h j u l y

4

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

In the year of its 20th anniversary, AmCham Bulgaria celebrated American Independence Day yet again with an upbeat party. The chamber marked the 239th anniversary of the Declaration of Independence by inviting some 3,000 guests to the grounds of the American College of Sofia.

The speeches at the opening echoed the spirit of this remarkable day in American history. The charming Marching Stars Band of Zlatitsa School created a festive atmosphere with music and dance. During the performance of the American and Bulgarian national anthems, the U.S. Marine Corps pre-sented the National Colors.

Families, friends and partners came together once again to spend an unfor-gettable Fourth of July with beautiful

weather, delicious foods and beverages, a fun field for the kids, all accompanied by brilliant music from the band Dirty Purchase. AmCham raised 4,700 Leva from the sales of charity raffle tickets that offered the chance of winning 43 prizes donated by AmCham members.

AmCham sincerely thanks all those who sponsored and contributed to the cele-bration, among whom we would like to acknowledge America for Bulgaria Foundation, Mobiltel, AES Bulgaria, BMW Bulgaria, Dundee Precious Metals, Adecco Bulgaria, Amgen Bulgaria, American English Academy, Benjamin Moore, Cisco Systems Bulgaria, EY – Ernst & Young Bulgaria, Eurobank Bulgaria, Forton, Lindner Immobilien Management, Nemetschek Bulgaria, UniCredit Bulbank, McDonald’s, McCafe, Pain D’or, Kamenitza, Coca-Cola

Bulgaria, Right Rental, Red Devil, Force Delta, Orbit, and last but not least our host, the American College of Sofia!

AmCham President, Dr. Krassimira Chemishanska, welcomed the guests together with Joseph Krinock from the U.S. Embassy, the new president of the American College of Sofia, Dr. Richard Ewing, and AmCham’s Executive Director Valentin Georgiev.

AmCham President Reflected on 2015

The Fourth of July celebration provided an opportunity for AmCham to reflect on its development over the past six months. As President Chemishanska stated, it is difficult to single out one of the many events or actions that demon-strate the chamber’s commitment to

AmCham Invites 3,000 to Celebrate Four th of July

The traditional July 4th cake cut in the company of many children.

5p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

4 t h j u l y

fostering economic development in Bulgaria. AmCham enabled the leaders of the American, Bulgarian and interna-tional business community to voice their opinions more effectively by participat-ing in highly publicized events.

The chamber began the year with an important business forum with Prime Minister Boyko Borissov, followed by business breakfasts with AON, AUBG, Auxionize, Deloitte, IDC, PwC. In col-laboration with the U.S. Commercial Service in Bulgaria, AmCham also orga-nized a regional roundtable in Stara Zagora which broadened the range of business contacts available to its mem-bers.

Later in the year, AmCham cooperated with Confindustria Bulgaria and the French-Bulgarian Chamber of Commerce and Industry to host a forum on the rule of law during the debate

Raffle Contributors Albena AD

Amway

Boulderland & Funtopia

Central Park Hotel Sofia

Centralni Hali

Cheque Dejeuner Bulgaria

EnergoService AD

Euphoria Club Hotel & Spa

Factor TC Ltd.

FMG Rental Ltd.

FPI Hotels & Resorts

Grand Hotel Sofia

Hilton Sofia

Hotel Marinela Sofia

Kempinski Hotel Grand Arena Bansko

Mobiltel EAD

Novotel Sofia

Pamporovo AD

Penkov, Markov and Partners

Plesio Computers

Premier Luxury Mountain Resort

Radisson Blu Grand Hotel Sofia

Sofia Hotel Balkan

Technopolis

Yastrebets Hotel Wellness & Spa

The notorious performers Emo, Amalia and Ivan Lechev.

Daniel Berg, EBRD (second from right) was honored with a painting for his service as BoD member and Vice President of AmCham in the period 2011-2015. From left are: David Butts, CMS Cameron McKenna, George Brashnarov, Nemetschek Bulgaria, Krassimira Chemishanska, Amgen Bulgaria and Valentin Georgiev, Executive Director.

4 t h j u l y

6

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

regarding the judicial reforms in Bulgaria. AmCham’s new M2M executive meeting events streamlined communication between our members. Most recently, the chamber cooperated with the German-Bulgarian Chamber of Commerce and Industry, Confindustria Bulgaria and the French-Bulgarian Chamber of Commerce and Industry to host the “One More Summer Party” event.

Krinock, Ewing Speak on Democracy

U.S. Embassy’s Krinock thanked AmCham and the American College of Sofia for their roles in bringing a piece of America to Sofia. He said that the Fourth of July is a special occasion to celebrate ideals of life, liberty and the pursuit of happiness. He emphasized the belief that all people are created equal and that anyone with a dream and determination should be given the opportunity to realize that dream. He recalled the vision of the founders of the United States of America that democracy requires hard work and commitment and called on everyone present to reflect on how this vision can guide us in building a strong, demo-cratic community.

In his first address as president of the American College of Sofia, Dr. Ewing emphasized how the ideals enshrined in the American Declaration of Independence are valid for all peoples and nations. He reiterated Krinock’s point that a healthy democracy requires constant vigilance by praising those members of the community who “stand guard” for the principles of the Founding Fathers. He singled out members of the U.S. Embassy and the Marine Corps for their service to the American nation. He also praised the teachers at the American College of Sofia for their commitment to continue the “proud tradition of educa-tional excellence.”

Dr. Ewing said: “On this day, we also have an opportunity, all of us here – Americans, Bulgarians, citizens from around the world – to rededicate our-selves to a shared commitment to what should be the birthright of all people: life, liberty, and the pursuit of happiness. This idea is what we truly celebrate today, this idea that has changed the arc of history. May it live forever.” �

The BMW corner.

Iliana Zaharieva, Mtel gives out awards to winners of Mtel Golf Masters-Mini Zone.

Marching Stars band of Zlatitsa School.

7p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

4 t h j u l y

Much appreciated animation of Malchugan Velikan.

Children awaiting raff le awards.

Mtel Golf Masters-Mini Zone.

Giving out the prizes to raff le winners.

McDonald’s corner.

Dr. Krassimira Chemishanska, AmCham President welcomes the audience.

Refreshing British cider.

American College lawns provided the perfect July 4th atmosphere.

4 t h j u l y

8

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

For another year, Right Rental Special Events Services sup-ported the July 4th celebration of the American Chamber of Commerce in Bulgaria.

Right Rental provides event overlay services, designing and delivering complete temporary environments for the most pres-tigious corporate, sporting, cultural, and social occasions in the national calendar. Providing full event management or rental and installation of temporary event equipment Right Rental caters for any event, brand or venue.

Especially for this year’s the 20-th anniversary of the American Chamber in Bulgaria we gave the opportunity of 200 guests to dine in the sky surrounded by the beauty of Sofia city. This unforgettable experience was realized with the help of the Dinner in the Sky team, part of the global Dinner in the Sky group, operating in 45 different countries as one of the most unusual event concepts in the world.

The unique dining platform has created some of the finest pri-vate dining, cocktail parties, product launches, wedding recep-tions, bespoke event experiences on a global scale. Dinner in the Sky can be utilized as a powerful business tool to host exclusive events as it offers an exceptional visibility for clients thanks to the event's lifting height and can be customized with a company logo all over.

This extraordinary novelty restaurant hoists its diners, table,

and waiting staff up to 50 meters into the sky. Dinner in the Sky is available for sessions of 8 hours at any location offering an area of at least 500 m². The table sessions operate with up to five personnel in the middle walk way (e.g. chef, waiter, enter-tainer, photographer or presenter), accommodating altogether 22 exclusive guests.

This floating restaurant, developed in Belgium nearly 10 years ago, has appeared in Bulgaria a few times as part of corporate events. The official representative of DITS in Bulgaria is Sky High Events, working in partnership with Right Rental Special Events Services and Red Devil Catering.

The sky is no longer the limit! �

Taking Everyone’s Expectations to New Heights!

a n a l y s i s

10

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

Greek Foreign Minister Nikos Kotzias (L) chats with his Bulgarian counterpart Daniel Mitov (R) during their official meeting in Sofia in June, 2015, a few days before expiration of the initial bailout-program.

“What is happening in Greece is cer-tainly an aggravating factor for the Bulgarian economy. Always when there are crises in neighboring countries, no matter which, we suffer from that. Yes, we will be affected, that is more than certain, but we seem to be well pre-pared this time. No matter what hap-pens in Greece, Bulgaria has learned

its lessons from more than one crisis it has been through,” President Rossen Plevneliev said on the eve of the refer-endum in Greece.

The head of state emphasized that the Bulgarian economy was stable and growing despite the crisis in the region. Bulgarian banks enjoy high liquidity

and will cope with any situation. The Bulgarian institutions are closely observing the process and have taken all necessary measures. Bulgaria is well prepared and will “pass with digni-ty” through any crisis in the region, including the one in Greece, Plevneliev added.

Analysts are unanimous that

Greece’s potential exit from the Eurozone is unprecedented

and the impact of such a scenario on the Bulgarian economy and financial system is very difficult to predict. That is why comments do not point in the same direction.

Greece’s “No” Reverberates in BulgariaBusinesses, government and politicians expect difficulties in bilateral trade if Greece withdraws from the Eurozone. Experts differ in their forecasts

By Marina Tsvetkova

The longest national anthem in the world is the Greek one. The poem, Hymn to Liberty, was written by Dionysios Solomos in 1823 and consists of 158 stanzas. Today financial experts are wondering how many years will it take for Greece to pay off its debts to lenders. We are speaking of 319 billion Euro, and that is after 107 billion Euro was written down three years ago. What will happen in the case of Grexit?

For the long term, a Greek exit would disrupt the Euro's "Hotel California" prin-ciple: that, as the Eagles put it, you can "check out anytime you like, but you can never leave," Associated Press reported.

11p a g e

Am

Ch

am

Bu

lga

ria M

ag

azin

e Ju

ly 2

01

5

a n a l y s i s

A reduction in Bulgarian exports and fewer Greek tourists on the Bulgarian beaches can be expected; also, there are nearly 300,000 Bulgarians working in Greece who are faced with the threat of losing their jobs or having their wages cut. These are some of the risks to the Bulgarian economy in case of Grexit. At the same time bankers main-tain that Bulgaria may benefit from the grave situation in Greece. They say that the crisis may trigger relocation of economic potential from Greece and make Bulgaria more attractive for inves-tors.

Economics professor Steve Hanke, who is known as the “father of the cur-rency board” in Bulgaria, expects a “slightly negative” impact of what is happening in Greece on Bulgarian finance, which is in a relatively good shape. The same holds true for exports, Hanke said. He added, “The overall situation in Bulgaria is not so easy but I think the currency board will stand the negative impacts from Greece the way it survived the ruble crisis and the big crisis of 2009.”

On the other hand Standard & Poor’s has voiced concerns that the credit rat-ing of Southeast-European countries could be downgraded if the Greek crisis affected their banking systems. The European Central Bank (ECB) in turn announced it could help Bulgaria and other countries in the region over the Greek crisis by giving them access to its refinancing operations.

Financial analysts of Royal Bank of Scotland, however, believe that Bulgaria and Romania are most at risk of “Greek contagion”. Bulgarian Prime Minister Borisov had to give assurances that the banking system in Bulgaria was not threatened by the crisis in Greece.

Bulgarian banks are stable and even if there is some relocation of deposits from one bank to another, that will not change the way “the banking system and the economy as a whole stand,” said Unicredit Bulbank’s chief econo-mist Hristofor Pavlov. According to him the risks for Bulgaria from the develop-ments in Greece have been to a great extent consumed already. Enough pre-cautions have been obviously taken to isolate the Greek banks’ subsidiaries from their headquarters.

Financiers do not think the crisis will cre-ate problems to the Greek-owned banks in Bulgaria. The market share of these institutions in this country is estimated at about 25 percent and they all have high capital adequacy. Besides, both the Bulgarian National Bank (BNB) and the ECB are determined to not allow a crisis situation in case of possible Greek exit from the eurozone.

Greek banks’ subsidiaries and branches in Bulgaria

are companies registered under Bulgaria law and are not subject to the

Athens-imposed capital control. They are not allowed to transfer money to their parent banks in Greece without BNB permission. Financial authorities, by and larger, repot that the situation is under control; Alpha Bank, which is a direct branch of a Greek bank, is oper-ating normally. Bulgarian banks with Greek parents are also United Bulgarian Bank and Piraeus Bank. Post Bank is member of Eurobank Group, where 64.6 percent of the shares, however, are owned by institutional and individu-al investors, including global Canadian and US investment funds like Fairfax Financial Holdings Limited, Mackenzie

History of Greek defaultsFollowing the Greek “no” and the debt service default late last month, Greece’s chances of going bankrupt and exiting the Eurozone have increased. But that will not be the first time the country has stopped paying its lenders. Greece has a history of poor finance management and has often been in unfavorable fiscal situations. To summarize, Greece has spent nearly 90 years – or half of its existence as a modern state (since independence from the Ottoman Empire in 1830) – in one or another sort of a financial crisis.

The first recorded default in Greek history occurred in the 4th century B.C., when 13 Greek city states borrowed funds from the Temple of Delos. Most of the borrowers never made good on the loans and the temple took an 80-percent loss on its principal.

Modern Greece has defaulted on foreign debt obligations five times:

1826This occurred during the country’s war of independence from the Ottoman Empire. In 1824 the country received a 472,000-pound loan from the London financial mar-kets to finance its military expenses. An additional loan of 1.1 million pounds was extended in 1825. A little later the military conflict grew into a civil war among rival factions. No payments were ever made to the bondholders. It was not until 1872 that the Greek government settled the loans, which by then with accrued interest had increased to over 10 billion pounds.

1843Greece took a loan of 60 million drachmas as a sovereign nation in 1832. The loan was arranged by the French, Russia and British governments. Greece managed to stay current on the loan until 1843, at which time the government stopped pay-ments.

1860After this default, Greece was shut out of international capital markets until 1878. During this time the government became dependent on the central bank for borrow-ing.

1893After the Greek government settled outstanding defaults in 1878, the global capital markets opened once again to Greece. Borrowing increased to unsustainable levels and the government suspended payments on external debt in 1893.

1932 This default happened during the Great Depression in the United States.

a n a l y s i s

12

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

Financial Corporation, Capital Group Companies, Inc., etc. All the four banks have been obliged by the Bulgarian National Bank to reduce their exposure to Greece to minimum.

Greek citizens on their part appreciate the economic stability in Bulgaria. There are more than 60,000 individual accounts opened with Bulgarian banks. Despite losing a quarter of their GDP in the past six years, Greeks on average are still three times richer than Bulgarians, EU Observer comments.

Greeks are getting poorer and cannot invest in this country, economic analyst Lachezar Bogdanov said. As for the so-called “Greek banks” in Bulgaria, they are not facing instability, as they can be bought out by other foreign companies, the way it happened with one of the mobile phone operators that was until recently Greek property, he added.

Businesses, government and politi-cians expect difficulties mainly in bilat-eral trade if Greece withdraws from the Eurozone. Bulgarian companies have already taken actions to redirect their exports to other counties because of

the crisis in Greece, Foreign Minister Daniel Mitov said.

Negative effects on the Bulgarian economy are already a fact.

Greece, together with Spain, is chal-lenging the first place in the EU in

number of Bulgarian workers. There are some 300,000 Bulgarians working in Greece and that is a potentially seri-ous problem for Bulgaria, former Social Minister Ivan Neykov said. According to him even if half of these people return because of the crisis in Greece, that will have a two-fold effect. It will be a burden to the Bulgarian social system and, also there will be no cash inflow from those otherwise working Bulgarians, he added.

The second risk concerns exports to Greece. The country is Bulgaria’s fourth most important trade partner among EU member states. In 2014 bilateral trade turnover exceeded 2.8 billion Euro, data of the Ministry of Economy show. Over the past two years exports declined a little but in the first quarter of 2015 there was a rise in both exports and imports. Between January and March Bulgarian companies exported goods and ser-vices for 705 million Leva, up 13.4 percent on the year-ago period. For the first quarter of the year Greek imports totaled 579 million Leva, which is an increase by 1.9 percent year-on-year.

Recently, Bulgarian exports to Greece have been dominated by low-pro-cessed goods, electricity and by-prod-ucts. For the past two years exports have included mainly knitwear and ready-to-wear clothing, grain, cheese and curd, machine parts, poultry meat, electrical parts, glassware.

Bulgaria starts preparation for Eurozone entryat the background of the dramatic events in Greece, which is facing the risk of becoming the first country to be expelled from the Euro. In early July the Bulgarian government set up a coordination council to prepare the country for Eurozone mem-bership. The council is headed by the finance minister, who will be responsible for the introduction of the single currency.

“Our ambition is to join the Eurozone as soon as possible,” Minister Vladislav Goranov said. “If the circumstances are fortunate and the criteria are met, that can happen in 2018 at the earliest.”

Bulgaria’s way to the Eurozone passes through a stress test of the banking system and restoring confidence in it, fulfillment of the technical criteria (inflation, deficit, interest rates), followed by participation in ERM II, the so-called waiting room, where a country usually stays for two years before it is admitted to the Eurozone.

In Goranov’s words, Eurozone entry should not be an end in itself, because “the hysterical setting of unrealistic goals in past years has taught us that we will not be admitted before we are ready.”

Currently 19 of the 28 EU countries are members of the Eurozone. As Goranov put it, “many of the non-Euro countries are hesitating, the rest are willing to join but at a various speed.” According to him Bulgaria is practically “almost a Eurozone member” because of the currency board but “we cannot use the advantages of cheap financing and the stability actual membership would give us.”

Unemployed Iakovos, 41, holds goods as he shops at a mini market in the suburb of Chalandri, northern Athens, Greece. “When my mother was alive, things were very different," he used to say. "We had her pension, we could pay the bills, I could find a home-cooked meal." Now it is difficult for him to find a job.

13p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

a n a l y s i s

Data of InvestBulgaria Agency show that Greece is among the biggest investors in trade, financial intermedi-ation and real estate. According to 2013 data of the BNB Greek direct investment amounts to 67.5 million Euro. Last year net payments to Greece exceeded the direct invest-ment inflow by 30.3 million Euro.

Three of the top 100 largest foreign investors are Greek companies: Viohalco with its companies Sofia Med and Stomana Industry; Hellenic Petroleum with its Eco-Elda Bulgaria; and Brewinvest with Zagorka.

Greece is the leader in number of for-eign-ownership companies registered in Bulgaria. A substantial inflow of com-panies to Bulgaria has been observed since 2009 and especially since 2011. The relocation to Bulgaria is due to the introduction of a 10-percent flat tax that year, economists say.

There were nearly 14,400 Greek com-panies registered in Bulgaria at the end of 2014, data of the Ministry of Economy show. The biggest number of Greek-owned companies are registered in the regions of Blagoevgrad (5,875), Sofia City (5,103), Plovdiv (1,159) and Haskovo (356). The rest are registered mainly in southern Bulgaria.

Some 10,000 small Greek companies that have moved to Bulgaria and cre-ated thousands of jobs are at risk. But the Greek bank holiday has also affected business in key industries

with Greek ownership in Bulgaria, such as steel, copper and cement pro-duction. Bulgarian grain exports are

also suffering losses.

Greece’s exit from the Eurozone will affect Bulgarian exports as a whole, because Bulgarian companies will have their products paid in drachmas, which are depreciated to the Euro and the Lev. At the same time the import of Greek goods will rise, the deputy chairman of the Bulgarian Industrial Association, Kamen Kolev, forecasts. According to him the introduction of the cheaper drachma will make Greece a more attractive and accessible destination for Bulgarian entrepreneurs. The prices of real estate in Greece will drop, produc-tion costs will also go down, Kolev says. Bankers, however, say that export will not be affected significantly. The reason for this is that many Bulgarian compa-nies are already switching to non-EU partners. Bulgaria’s trade with Greece accounts for 10 percent of the total for-eign trade turnover, statistics show. �

Greek pensioners, who do not own an ATM card, line up to get part of their pensions in front of a branch of National Bank of Greece in Athens, Greece, July 2015.

a n a l y s i s

14

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

After the first seven years of the EU funding the value added of the agricul-tural sector decreases although the Bulgarian agriculture hasn't seen as much investment for the last 100 years as during the period of the Bulgarian membership in the EU. This paradox was presented by the analysts of the Economic Research Institute at the Bulgarian Academy of Science.

According to the annual report of the Institute the gross value added (GVA) of the agricultural sector in absolute terms has been about 4 bln. levas since 2010. From 2008 to 2013 there was a contrac-tion of the value added in the sector.

In comparable prices GVA as a whole decreases and reaches levels of 25% lower than the average ones between 1998 and 2006. Accordingly the agricul-tural share in the total GVA falls under 5% for the first time since the gross domestic product (GDP) in Bulgaria has been monitored, say the analysts.

“Our analysis shows that such a large sum has never been invested in the rural areas for the last 130 years. Qualitative analysis also shows that after the EU funding for single area pay-ment starts the paradox that the money comes into the agriculture, but the GVA of the sector decreases”, comments Assoc. Prof. Ognyan Buyukliev. Still the GDP based on the agriculture increas-es.

“Until 1989 we used to produce 14 mln. tones of grain and now it's only about 3,5-4 mln. tones. We didn't export grain at that time and it was transformed into feed, flour, bread, then the feed into meat and milk which transformed into

diary and meat products and thus the valued added used to go up”, comments Buyukliev.

Other reasons for the present state of the sector is that 78% of the funds are used by only 3-4% of the farmers – enormous agricultural structures that accumulate substantial income and expand their economic limits. The aim of the grain production, however, is export and not products with high value added. At the same time the farms are well equipped mechanically and have small staff.

In Buyukliev's opinion, since the country has become a grain exporter in theory we have lost about 500 000 jobs and 1,5 bln. levas value added.

The analyst point out that the research-ers don't blame the grain producers for the state of the agricultural sector. It is a matter of national policy in order the

producers to find more profit in trans-forming the grain than in exporting it.

The report adds that Bulgaria hasn't made the growth of this important econ-omy sector a national goal and policy. As a shortcoming of the present agricul-tural policy the analysts indicate the insubstantial support for the little and middle size producers which leads to less farms.

“The main unaddressed problem is the lack of competitive family businesses. This should have been in the core of the policies – modern and well equipped family companies”, comments the direc-tor of the Institute prof. Mitko Dimitrov.

The researchers recall that most of the agricultural funds are given per unit ara-ble land. Still whether the EU funds will really be invested in the holding or in buy-ing personal yacht or helicopter depends on the good will of the farmer. �

The Value Added in the Agricultural Sector Decreases in Spite of the EU FundsFarmers should produce more expensive products, recommend the analysts of the Economic Research Institute

European Commissioner for Agriculture and Rural Development Phil Hogan walking on a meeting with the Bulgarian Minister of Agriculture and Food Desislava Taneva in Sofia.

a n a l y s i s

16

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

Hillary Clinton’s campaign did not convene her first large event until mid June, some three months after it kicked off in a low-key mode, without the big rallies favored by her potential Republican rivals such as Jeb Bush, Marco Rubio, Scott Walker, Ted Cruz, Rick Perry, Rand Paul, Chris Christie, Lindsay Graham – and, of course, Donald Trump. In the spring, the former first lady, senator, secretary of state and humanitarian made a clear point of not having a flashy announcement of her much expected decision to run for the highest office in the land. She traveled in an unremark-able van and stopped in a dozen coffee shops along the way.

Yet you cannot go unnoticed as a Clinton, though, and not just because of the three cars of Secret Service agents following her at all times. The very first infraction her driver committed by park-ing in a disabled spot during a stop-over exploded on social media, magnified by the (mostly) conservative talk-show circuit. It exemplified something that everybody already knows: Hillary Clinton is a polarizing figure in American politics. People either love her dearly or hate her vehemently. There’s hardly any middle ground.

By early summer, Clinton had become the target of multiple fusil-lades. Her principal opponents routinely identified themselves by where they stand in opposition to Hillary Clinton as much as any-thing else. Carli Fiorina, the only female candidate on the Republican side (out of 15 total by mid-July count) even trailed her Democratic rival’s events, physically popping up nearby and staging her own sessions in Iowa and New Hampshire. The obsession with Clinton is almost comical, yet it is also indicative of where the main battle lines of 2016 will be drawn.

It is no coincidence that just before her announcement TIME

Magazine came out with a cover proclaiming simply The Clinton Way. Bill and Hillary, of course, are legends in their own right, whether you think of them as devils-incarnate (if you are a likely Republican voter), or near-deities (if you are a Democrat). Throw into the mix the fact that for the first time in its history the United States has an actually viable female candidate for the presidency, who lost in 2008 one of the most contested primaries in recent memory, and the emotions run high on all sides.

At least one thing seems fairly certain now – Hillary Clinton appears to be a shoe-in for the Democratic nomination in 2016. Few pundits will doubt her supremacy. The challenges so far – the virtually unknown Martin O’Malley, former governor of Maryland, and quirky Vermont Senator Bernie Sanders - are quite unlikely to win, unless something extraordinary happens. In all fairness, Senator Sanders has gathered some media attention, which may – just may! – turn him into a Ross Perot of the Democratic Party. He has loyal followers, and he has gotten into a much needed niche. Yet his odds are long even in today’s post-recession America, whose middle class has been battered badly.

Senator Elizabeth Warren, the progressive left’s dear, steadfastly refuses to run, probably correctly calculating that she, too, is posi-tioned too far to the fringes to be a successful contender in the general election. She is also an unlikely choice for the vice-presi-dential slot, because the optics of an all-female executive team is not likely to win over the majority of a still conservative America ensnared in a variety of military engagements abroad. As it stands, Hillary Clinton leads in virtually all polls as a Democratic nominee and in head-to-head contests with all likely Republican rivals. Yes, we are almost a year and a half away from the November 2016 showdown, but the battle lines are being drawn

The Inevitable Hillar y?By Christopher Karadjov, Special to AmCham Bulgaria Magazine

Former US Secretary of State Hillary Rodham Clinton of New York speaks at the Long Center in Austin, Texas, USA in June.

17p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

a n a l y s i s

as we speak. The horse race is about to begin.

So here comes Clinton’s biggest challenge: establishing herself as a competent, strong leader of the world’s largest economy and strongest military power. She is a rich woman, who positions her-self as the champion of the poor, underprivileged, disenfranchised. Not an easy feat to accomplish. It is also a paradox that her immense foreign-policy experience is actually also her weakness. When Barack Obama ran for the same job, his status of a relative novice worked just fine for him. He spoke and voted against the Iraq War (Clinton supported it); he had no encounters worth the mention with foreign leaders; his words preceded his actions. It is difficult to understate the freshness of Obama at the time, which is best exemplified by his Nobel Peace Prize at the very start of his presidency. The immensely more experienced Clinton, who served for three years as Obama’s secretary of state, has been hampered by the events in Benghazi in 2012, when the U.S. ambassador was killed along with three other Americans. The Right has been drum-ming up the case that the Obama administration engaged in a cover-up on par with Watergate, if not worse. Clinton defenders have stood by her firmly, accusing Republicans of a witch hunt. The official Congressional investigation of the case may not be released until later this year, or even in 2016. Certainly, the Clinton camp would like to see this cat get out of the bag as early as possible, but good money can be bet on the assumption that we have not heard the last about Benghazi.

Then there is the question of the donations for the Clinton Global Initiative foundation, which came from foreign governments. As anything that is Clinton-related, this topic has been overblown by the enemies and over-defended by the friends. The e-mail imbro-glio of the former secretary of state is also an issue that has been in play for quite some time now. As inconsequential as it may seem to a reasonable observer, it cannot be discarded as such.

The accumulating controversies have effected a precipitous drop in the likability of Hillary Clinton; she polls about 15 per cent lower than just three years ago. Her husband had to respond to a direct question of whether she is to be trusted by saying, “I trust her with my life.”

All told, don’t expect a normal, sensible discussion about policies and the future of the United States; it is going to be a slug fest indulging in dirty tricks and character assassination. Check out the curious case of Donald Trump, whose inflamed rhetoric some-thing along the lines of “Mexican government sending criminals to the United States” and such makes even the most hawkish Republican candidates sound like the Dalai Lama by comparison. We can laugh him off as a clown, but the fact of the matter is that he got more attention than the just-averted ‘Grexit’ or the negotia-tions for the nuclear deal with Iran.

Then, there is all the money. The 2016 presidential election is expected to break yet again all fundraising and spending records of yore. When all will be said and done, Clinton is estimated to amass a war chest of some $2.5 billion, which is an astronomical figure. Her husband won the 1992 election with some $100 million in the campaign bank. Whatever you think of the merits of the seemingly never-ending U.S. presidential campaign cycle, as a sheer investment of money, time, effort and know-how it is unprecedented. Clinton will benefit from the huge donor network created and maintained by the Obama camp; Hillary’s operatives also will likely inherit many of the closely guarded voter lists, con-tact information and grassroots organizations that her former rival and boss used to win the presidency twice.

The election-year politics in the Unites States has always been billed as entertainment of the highest order. In 2016, it may be the best ever. Or the worst yet. �

n e w m e m b e r s

ASSESS Ltd. is the biggest company in Bulgaria specialized in professional polygraph and psychological services. The company conducts pre-employment testing, loyalty test-ing, professional psychodiagnostics, psycho-

logical assessment, psychological profiling and many more. The company organizes specialized trainings by international top experts in the field of criminal psychology and polygraph examinations. ASSESS Ltd. has established long-term partner-ship with The Backster School of Lie Detection for Polygraph Training courses in Bulgaria, Eastern European countries and

Azia. ASSESS Ltd. is official representative for Bulgaria and other European countries of Lafayette Instrument Company, is the world's leading manufacturer of polygraph instrumentation.

Contacts:Todor Todorov

General ManagerTel.: +359 893 388 323

http://www.assess.bgAddress: 1, Srebarna Str.

1408 Sofia

Hydroenergy Company JSC (HEC) is a Bulgarian-based con-struction company, active in the

renewable energy industry, operating mainly in the photovoltaic solar sector, which is planning to start commercial operations on the US market. HEC was established in 2006 and have been expanding ever since. Currently, the company has more than 600 employees with offices in Bulgaria, Chile, United Kingdom, USA, Japan and Greece. The main service provided by HEC is the integrated installation of PV plants, including mechanical and electrical (DC) installation works, which is in a way unique for the industry (typically mechanical installation is done by one party and electrical by another). So far, HEC and its subsidiaries have

constructed and commissioned more than 120 power plants – both hydro and solar. The company has more than 1,000 MWp experience in construction of various parts of more than 95 solar PV plants, that were developed and successfully put into opera-tion in the past three years and has managed the coordination of all activities during the construction phase of the projects.

Contacts:Vladimir Tabutov

Executive DirectorTel.: 073/ 530 100/ 102

Address: 2B, P. K. Yavorov Blvd.2700 Blagoevgrad

a m c h a m e v e n t s

18

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

Transfer pricing is a hot topic for the tax authorities worldwide. Increased scrutiny during tax audits is triggered by the ongoing demand to increase state revenue after the financial crisis.

When auditing a cross-border transaction between entities belonging to one group, the tax authorities in one of the states involved may end up with a conclusion that the transfer price does not comply with the arm’s length principle (i.e. deviates from the market price). Accordingly, the tax authorities will make a transfer pricing adjustment and assess additional tax liabilities plus default interest. The result would be double taxation of the profit from the audited transaction, as the increased profit/decreased cost in the first state is not automatically recognized in the second state as a deduction for the other party to the transaction.

Mutual Agreement procedure How to resolve this financial burden for the group affected by such adjustment? Besides the appealing proceedings in the state of the adjustment, there is another tool available in the international legal framework called ‘mutual agreement procedure’ (MAP). MAP is a procedure between the authorities of the two states aimed at ensur-ing equal application of the arm’s length principle in both states. In substance, during MAP the authorities exchange information on the transfer pricing adjustment made in one of the states so that the other state could analyze its justification and finally, agree to recognize this adjustment. The ultimate result implies a re-allocation of the fiscal revenue between the states, which draws political character to the procedure. In many jurisdictions, the tax authorities are willing to enforce agreement achieved during only if the taxpayer waives its

appealing against the tax assessment. Therefore, MAP is in fact an alternative to the tax litigation.

MAP may be initiated by the taxpayer claiming the application of the adjustment in the other state, based on the arm’s length principle. For the Bulgarian businesses part of multinational groups, there are two possibilities to initiate MAP:

� MAP under the double tax treaties (DTT MAP);

� MAP under the EU Arbitration Convention1 (AC MAP) applicable across EU member states.

There is an important difference between these two possibilities. In a DTT MAP the tax authorities may not reach to a mutual agreement and thus, the double taxation may stay unresolved. The AC MAP, however, provides for an effective mechanism to achieve final agree-ment between authorities – if they fail to reach an agreement within two years, an independent advisory body of experts (‘advisory com-mission’) would be set up and become entitled to resolve the case in a way binding for the authorities.

The EU Arbitration ConventionThe EU Arbitration Convention is recognized as an important tool to enable effective EU Internal Market. In 2006, the Council of the EU adopted a Code of Conduct for the effective implementation of the AC developed by the EU Joint Transfer Pricing Forum (JTPF). It provides for recommendations to the member states how AC should be applied and gives practical guidance on the technical aspects of AC application, e.g. content of the MAP request, starting point of the deadline for its submission, the set-up of the advisory commission, etc. The Code is a political commitment rather than a statutory instru-ment where the importance of having an effective way to resolve double taxation is recognized. In March 2015, EU JTPF published a Final Report on Improving the Functioning of the AC, which contains a number of suggestions for amendments in the Code of Conduct aimed at enhancing the application of the AC in various situations.

The recent developments of the BEPS (Base Erosion and Profit Shifting) project of OECD and G-20 add new tools for the tax author-ities to collect information and enhance application of the arm’s length principle in international deals. This increases the likelihood of transfer pricing adjustments on cross-border deals. As a conse-quence, it can be expected that MAP as a tool to resolve double taxation will be used needed more often, also in Bulgaria.

The present communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. No entity in the Deloitte Network shall be responsible for any loss what-soever sustained by any person who relies on this publication. �

Mutual Agreement Procedure as a Tool to Resolve Double Taxation

1 Convention 90/436/EEC of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (OJ 225, 20.08.1990).

AmCham Hosts a Business Breakfast with Deloitte Bulgaria

AmCham hosted a business breakfast with Deloitte Bulgaria on transfer pricing and cross-border dispute resolution on June 23d, 2015 at the Sofia Hotel Balkan. Guest speakers were Aleksandar Stefanov, Tax Manager, Deloitte Bulgaria, Desislava Kaludova, Expert at HQ of the National Revenue Agency, and Bogdan Barbu,

Manager Transfer Pricing Services, Deloitte Romania. Around 50 AmCham members attended the event. In his presentation Aleksandar Stefanov elaborated on the topics: What is a cross-border transfer pricing (TP) case; mutual Agreement Procedure (MAP) under Double Tax; Treaties EC Arbitration Convention and its procedure and Advance Pricing Agreements (APAs).

Desislava Kaludova, Expert at HQ of the National Revenue Agency talked about cross border dispute resolution regard-ing transfer pricing and avoidance of double legal taxation.

By Alexandar Stefanov, Tax Manager, Deloitte Bulgaria

a m c h a m e v e n t s

20

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

Some 58 business-to-business meetings were held at the sec-ond M2M Monthly Executive Meeting event organized by the AmCham on June 17, 2015. The members had the opportunity to meet fellow AmCham companies from a specific sector at a speed matchmaking event hosted by Novotel Sofia. At the tete-a-tete meetings the participants bullet-pointed their business activities and upcoming projects.

Nine firms came to the event from manufacturing, relocations and moving: Arexim Engineering, Dundee Precious Metals Inc., Ekoterm Proekt EAD, Evrika Commerce Ltd., Ideal Standard - Vidima AD, Industrial Holding Bulgaria, Panchim Ltd., Titan Zlatna Panega Cement, Allied Pickfords Bulgaria, Orbit Ltd.

All in all, 18 other AmCham members met with the industry firms sharing the positive outcome from this new format with pure business approach.

Novotel Sofia gave out two vouchers to raffle winners during the cocktail after the busy meetings.

The next M2M executive meeting event will take place in September. �

Speed-dating for Businesses Proves Successful

From left: Georgi Marinov, Novacon Bulgaria with the Allied Pickfords Bulgaria team.

Gergana Murtova, AUBG with Kamen Dimitrov, Arexim Engineering.

Nikolay Vangelov, Ekoterm Proekt and Georgi Gunchev, Bulstrad.

Mincho Minkov, Evrika Commerce with the team of Walltopia.The team of Dundee Precious Metals with Zlati Petkov, S&T Bulgaria.

21p a g e

A

mC

ham

B

ulg

aria

M

agazin

e July

2015

a m c h a m e v e n t s

AmCham submitted positions accompanied by specific legisla-tive proposals regarding the draft new Public Procurement Act to the Deputy Prime Minister Tomislav Donchev, the Minister of Economy Bozhidar Loukarsky and to the Executive Director of the Public Procurement Agency Miglena Pavlova.

The proposals that were submitted in January and in May 2015, have been developed by members of the AmCham Public Procurement and EU Funding Advisory Committee as part of the ongoing process of implementing the package of new EU Directives of 2014 in the field, which have to be trans-posed into Bulgarian law by April, 2016.

They aim at increasing transparency in Bulgarian public pro-curement, providing foreign companies (either large multina-tionals or SMEs) with de jure and de facto equal access to bidding in the country, increasing competition on the market and basically suggest an anti-corruption driven platform. Considering the great importance of the act and the fact that the new directives rules support the national priorities of eco-nomic growth and deficit reduction by making the public pro-curement process faster, less expensive, more effective and efficient for business and contracting authorities, it shall be noted that the changes provide a much more advanced, flexi-ble and commercial approach compared to the existing regime.

Obsolete and unnecessary constraints have been removed, and many new features have been added to foster and mod-ernise public procurement. For contracting authorities, this means being able to run procurement exercises faster, with decreased red tape, and more focus on getting the right sup-plier and the best tender. And for suppliers, the process shall be quicker, less costly, and less bureaucratic, enabling more effective compete.

For the first time the concept of innovation partnerships to both the public and utilities sector directives has been introduced with the aim of encouraging public procurement to be used to "spur innovation". “Best price-quality ratio” was introduced that

will allow an authority to award to the bidder submitting the lowest bidder, in case the latter meets minimum quality stan-dards established by the authority which in essence encour-ages contracting authorities to use the most economically advantageous tender.

Public Procurement and EU Funding Advisory Committee members believe that the working group will consider carefully all of the drafting suggestions provided. �

AmCham Submits Proposals for the AmCham Submits Proposals for the Draft New Public Procurement ActDraft New Public Procurement Act

The co-chairs of Public The co-chairs of Public Procurement and EU Funding Procurement and EU Funding Advisory Committee Advisory Committee Radoslav Rizov and Radoslav Rizov and Zlatina Ruseva-Savova.Zlatina Ruseva-Savova.

a m c h a m e v e n t s

22

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

The Bulgarian Chamber of Commerce and Industry (BCCI) celebrated the 120th anniversary of the establishment of the chambers of commerce and industry in Bulgaria with an inter-national business forum on theme “The Role of Business Associations in Support of Entrepreneurship”. Special guests at the forum were the President of the Republic of Bulgaria Rosen Plevneliev together with former Bulgarian Presidents Petar Stoyanov (1997 – 2002) and Georgi Parvanov (2002 – 2012).

In his opening speech the President of BCCI Tsvetan Simeonov said that BCCI is an organization with universal membership, a home for companies from all sectors of industry ranging from micro companies to the largest businesses.

“Far back in 1895, in an extremely organized manner on the same day in four economic centers in the Kingdom of Bulgaria the first regular sessions of the chambers of commerce and industry of Sofia, Plovdiv, Varna and Ruse were opened. To

this day they remain an example of encouragement for the economic agents, and have always aspired to covering the interests of entrepreneurs without setting the condition for membership as a prerequisite for providing support and assis-tance.”

The high level forum triggered a wide discussion about the economic developments and challenges in Bulgaria during the last 25 years. The conference was attended by ministers, MPs, diplomats, academics, representatives of the universities, companies – local and international partners, sectorial organi-zations, regional chambers of commerce and industry and other business associations.

The executive director of AmCham Bulgaria Valentin Georgiev recognized the good partnership between AmCham and BCCI through the years and elaborated on the perspectives of the transatlantic trade and investment partnership (TTIP) for the European economy.

“Our belief as an organization with over 300 members that represents the interests not only of American, but also multina-tional and Bulgarian companies, is that currently there is one initiative on the horizon, which has the potential of force to boost the European economy once more, and this is the trans-atlantic trade and investment partnership (TTIP)”, said Valentin Georgiev.

He further said that an ambitious TTIP deal would increase the size of the EU economy around €120 billion (or 0.5% of GDP) and the US by €95 billion (or 0.4% of GDP). This would be a permanent increase in the amount of wealth that the European and American economies can produce every year. �

Chambers Celebrate Anniversary, Discuss TTIP

Tzvetan Simeonov, President of BCCI addresses the audience at the forum. At the panel are the current President Rosen Plevneliev and former Presidents Petar Stoyanov and Georgi Parvanov.

Valentin Georgiev, Executive Director of AmCham.

a m c h a m e v e n t s

24

A

mC

ham

B

ulg

ari

a M

agazin

e July

2015

To wind up a busy first half of the year, AmCham Bulgaria, the German-Bulgarian Chamber of Commerce and Industry, the French-Bulgarian Chamber of Commerce and Industry and Confindustria organised One More Summer Party on June 25th, 2015 at the One More Cinema in Sofia. More than 200 members of the four business associations had the opportu-nity to meet and network with colleagues, partners and friends in an informal manner.

At the opening the guests were warmly welcomed by: Mitko Vassilev, chairperson, German-Bulgarian Chamber of Commerce and Industry, Valentin Georgiev, executive director AmCham Bulgaria, Konstantina Karanesheva, Communication & Events, French-Bulgarian Chamber of Commerce and Industry and Plamen Dilkov, Vice President, Confindustria. The leadership of the four business associations was delighted to recognize the dynamic and most beneficial partnership between the chambers. �

Four Business Associations Gather at One More Summer Party

From left: Valentin Georgiev, Plamen Dilkov, Konstantina Karanesheva and Mitko Vassilev.

Jazz and fun at One More Cinema downtown Sofia.

32А Cherni Vrah Blvd, 2nd floor, Aries Office Building, 1407 Sofia | Tel: +359 2 988 12 75 | Fax: +359 2 986 75 49 | www.aes.bg