WORLD TRADE  
ORGANIZATION  G/SCM/N/155/EEC/Add.3 
22 November 2007 
 (07-5132) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1  
of the GATT 1994 and Article 25 of the Agreement  
on Subsidies and Countervailing Measures  
  
EUROPEAN COMMUNITIES 
 
Addendum
 
   The following addendum to the notification of the European Communities relates to subsidy 
programmes of Bulgaria .   
 
_______________ 
 G/SCM/N/155/EEC/Add.3 
Page 2  
 
  BULGARIA  
 
TABLE OF CONTENTS 
 
 
 Page  
 
I. ENERGY ......................................................................................................................... ......... 3  
1. Coal production................................................................................................................ ........ 3  
2. Electricity.................................................................................................................... .............. 4  
II. ENVIRONMENT.................................................................................................................... .5 
1. Soil and Water Pollution ....................................................................................................... .. 5 
III. SUPPORT TO INNOVATIVE UNDERTAKINGS THROUGH THE NATIONAL 
INNOVATION FUND............................................................................................................. 6  
IV. ASSISTANCE TO ECONOMIC DEVELOPMENT AND STRUCTURAL ADJUSTMENT..................................................................................................................... ... 8
 
1. Rescheduling of tax liabiliti es related to investment............................................................. 8  
2. Support to regional development ........................................................................................... 9  
 
 
 
 All data concerning the amounts of subsidies is given in Bulgarian new levs (BGN).   
 
For the statistical and accountancy purposes, the applied exchange rate  in 2005 and 2006 is 
fixed to:   
1 EUR = 1.95583 BGN 
 
  G/SCM/N/155/EEC/Add.3 
 Page 3 
 
 
  I. ENERGY 
1. Coal production 
1. Title of the subsidy  
  Assistance to coal companies.   
 
2. Period covered by the notification
 
  2005;  2006.    
3. Policy objective and/or purpose of the subsidy
 
  Assistance to coal companies in conformity with  the Energy Strategy of the R. Bulgaria.  The 
Energy strategy provides for restructuring of th e energy sector until 2006 in order to bring the 
management practice in line with up-to-date standard s and to cut-off the subsidies to that sector.   
 
4. Background and authority for the subsidy (incl.  identification of the legislation under which it 
is granted)  
 
 2005 
 
 Law on the State Budget for 2005 (State Gazette No 115 of 30 December 2004);   
 Council of Ministers' Decree (CMD) No 11 of  19 January 2005 on the 2005 State Budget 
Implementation, amended by CMD No 117 of 15 June 2005;   
 Council of Ministers' Decree No 279/2002 on th e Energy strategy of the R. Bulgaria, 
approved by the National Assembly (SG 71/2002);  
 Council of Ministers' Decree (CMD) No 195/2000 on technical liquidation, conservation and 
overcoming of harmful consequences from cutting off the activity in coal output; supplemented by CMD No 306/2004 and CMD No 347/2004;   
 Council of Ministers' Decree No 117/2005 for re duction of subsidies to the programmes for 
liquidation of non-effective production coal units;   
 Instruction of the Ministry of Energy and Energy Resources on technical liquidation, 
conservation of the coal units a nd environmental rehabilitation.   
  Authorities responsible for the subsidy:  Minist ry of Energy and Energy Resources, Ministry 
of Finance.     2006 
 
 Law on the State Budget for 2006 (State Gaze tte No 105 of 29 December 2005, amended by 
SG No 33/21 April 2006);   
 Council of Ministers' Decree No 14 of 31  January 2006 on the 2006 State Budget 
implementation, SG No. 14 of 14 February 2006 г., with amendments;   
 Council of Ministers' Decree (CMD) No 195/2000 on technical liquidation, conservation and 
overcoming of harmful effects from cutting or limiting current activity in coal output;  supplemented by CMD No 306/2004 and CMD No 347/2004.   
  Authorities responsible for the subsidy:  Ministry of Economy and Energy, Ministry of 
Finance.   G/SCM/N/155/EEC/Add.3 
Page 4  
 
  5. Form of the subsidy
 
 
Grant.   
 6. To whom and how the subsidy is provided
 
 
 In 2005 and 2006, the subsidies were granted to coal companies for technical liquidation and conservation of poor deposit coal units.   
 
7. Subsidy per unit or in case where it is not possible, the total amount or the annual budgeted 
for that subsidy  
  In 2005 - BGN 15.37 mln.;  in 2006 – BGN 9.79 mln.    8. Duration of a subsidy and/or any other time limits attached to it
 
 
 2005;  2006.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  It is considered that the trade effects are minimal because of the purpose of the subsidy.   
 
2. Electricity 
 
1. Title of the subsidy
 
 
 Rehabilitation and modernization of the electri city transmission network - Energy 2.   
 2. Period covered by the notification
 
 
2005;  2006.   
 
3. Policy objective and/or purpose of the subsidy  
  Strengthening of the national electricity tran smission network, the regional control centers 
and the communication system of the National Electricity Company as part of the programme for preparation of the Bulgarian electricity tran smission network until 2007 for the parallel work 
with UCTE.   
 4. Background and authority for the subsidy (incl.  identification of the legislation under which it 
is granted)  
 
 Laws on the loan contracts with the IFI, ratif ied by the National Assembly on 10 May 2002 
(SG No 47/2002) and 13.02.2003 (SG No 18/2003);   
 Law on the Government Debt, SG No 93/2002;   
 Council of Ministers' Decree No 482 of 19 December 1997 (SG No 125/97) concerning the 
state obligation on the loans and on gua rantee agreements, replaced by CM Decree 
No 28/2003, SG No 15/2003;   
 Council of Ministers' Decree No 28 of 07 Febr uary 2003 (SG No 15/2003) on the adoption of 
the Ordinance on the requirements to be met by the investment projects financed by government loans and the projects applying for financing by state guarantee, and on the procedure of their consideration.   
  G/SCM/N/155/EEC/Add.3 
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   Authorities responsible for the subsidy:  Ministry of Energy and Energy Resources (Ministry 
of Economy and Energy in 2006), Ministry of Finance.    5. Form of the subsidy
 
 
 Loan guarantee.   
 6. To whom and how the subsidy is provided
 
  National Electricity Company.   
 
7. Subsidy per unit, or in case where it is not possible, the total amount or the annual budgeted 
for that subsidy  
  Loan guarantee on disbursements:  in 2005, amounted to BGN 23.97 mln.;  in 2006, 
amounted to BGN 39.83 mln.   
 8. Duration of a subsidy and/or any other time limits attached to it
 
  The loan guarantee terms are sp ecified for each loan case.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  It is considered that the trade effects are minimal because of the purpose of the subsidy.   
  II. ENVIRONMENT 
1. Soil and Water Pollution 
1. Title of the subsidy
 
  Assistance for reduction of soil and water pollution.   
 
2. Period covered by the notification
  
  2005;  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 Reduction of the polluting effect of waste on soil and water through the establishment of 
equipment for reprocessing and recycl ing, building of water treatment plants in order to restore the 
normal quality of the environment.    4. Background and authority for the subsidy (incl.  identification of the legislation under which it 
is granted)  
 
 Environmental Protection Act, SG No 91/25 September 2002, with amendments;  last 
amendment SG No 105/22 December 2006;   
 Rules on the organisation and the activity of th e Enterprise for management of environmental 
protection activities, adopted by Council of Ministers' Decree No 319/29 December 2002 
(SG No. 3 of 10 January 2003);   G/SCM/N/155/EEC/Add.3 
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   Protocols of the 2005 and 2006 sessions of the Management Council of the Enterprise for 
management of environmental protection activiti es for reduction of the harmful impact of the 
waste.   
  Authorities responsible for the subsidy:  Ministry of Environment and Water (MEW), 
Enterprise for management of environmental protection activities at the MEW.   
 5. Form of the subsidy
 
  Soft loans.   
 
6. To whom and how the subsidy is provided
 
  Through the Enterprise for management of environmental protection activities on a tender 
base to all firms and companies, implementing projects and programs for the reduction of soil and 
water pollution.   
 7. Subsidy per unit, or in case where it is not possible, the total amount or the annual budgeted 
for that subsidy  
  Soft loans extended in 2005 - BGN 3.08 mln;  in 2006 – BGN 5.35 mln.   
 
8. Duration of a subsidy and/or any other time limits attached to it
 
  The terms are specified fo r each soft loan case.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  It is considered that the trade effects are mi nimal in view of the purpose of the subsidy.   
  
III. SUPPORT TO INNOVATIVE UNDERT AKINGS THROUGH THE NATIONAL 
INNOVATION FUND 
1. Title of the subsidy
 
  Scheme for support of innovative undertaki ngs through the National Innovation Fund.   
 
2. Period covered by the notification
 
 
2005;  2006.   
 3. Policy objective and/or purpose of the subsidy
 
 
 Scheme, applicable in the period May 2005 to  December 2009, for support of research and 
development activities of the enterprises, especially of the small and medium sized enterprises (SMEs), working in collaboration with research organizations.    4. Background and authority for the subsidy (incl.  identification of the legislation under which it 
is granted)  
 
 2005  
 Small and Medium Sized Enterprises Act, SG No 84/1999, with amendments;  art. 3 and 15;    G/SCM/N/155/EEC/Add.3 
 Page 7 
 
 
   Council of Ministers' Decree No 15 of 31 January 2005 on providing for funds from 2005 
State Budget to the Ministry of Economy and Energy Resources' budget for establishing the National Investment Fund (NIF);   
 Council of Ministers' Decision No 723 of 08 September 2004 for adoption of Innovation 
strategy of the R. Bulgaria and measures on its realisation;   
 Management Rules of the NIF and Guidan ce on application for funding of innovative 
enterprises, approved in 2005 by the Orders No  RD-16-82 and RD-16-464 of the minister of 
economy and energy resources;   
 Orders No RD-16-633/2004 and RD-16-711/2004  issued by the minister of economy on 
conditions and eligibility of s upport of SMEs implementing the system "Hazard analysis and 
control of critical points" in the framework of the execution of the National strategy for 
encouragement of SMEs development in the period 2002-2006.   
  Authority responsible for the subsidy:  SMEs Promotion Agency at the Ministry of Economy and Energy Resources.   
 
 2006 
 
 Council of Ministers' Decree No 184 of 25 July 2006 on providing for funds from 2006 State 
Budget for the NIF functioning;   
 Council of Ministers' Decision No 385 of 22 May 2006 for amendment of CMD No 723 of 
08 September 2004 concerning the execution, mon itoring and assessment of the measures on 
realisation of the Innovation strategy of the R. Bulgaria;   
 Management Rules of the NIF and Guidan ce on application for funding of innovative 
enterprises, approved in 2006 by the Order RD-16-1402 issued by the minister of economy and energy.   
 
 Authority responsible for the subsidy:  SMEs Promotion Agency at the Ministry of Economy and Energy.    5. Form of the subsidy
 
 
 Grant.   
 6. To whom and how the subsidy is provided
 
  After hold open selection session, to research ins titutes, organizations and universities;  to 
enterprises (independently of the size), which activity is belonging to  processing and mining 
industries;  production and distribution of heat, elect ric power, gas and water;  construction industry;  
transport and communication;  computer technologies;   research and development in the natural, 
agricultural and technology sciences.    7. Subsidy per unit, or in case where it is not possible, the total amount or the annual budgeted 
for that subsidy  
 
- in 2005:  BGN 0.86 mln. - for participation of  the SMEs to the international fairs and for 
introduction of quality self control system "Hazard analysis and control of critical points" in 
the SMEs producing and processing meat;   
 
- in 2006:  BGN 3.94 mln. – support for participati on of the SMEs to the international fairs and 
for research and development projects (for feasib ility-study type projects, eligible for subsidy 
are 25 per cent of actual costs, the maximum subsidy being up to BGN 50000 for projects with implementation period up to 1 year).   
 G/SCM/N/155/EEC/Add.3 
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  8. Duration of a subsidy and/or any other time limits attached to it
 
  2005;  2006.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 Information on the trade effects of the subsidy not available.     
IV. ASSISTANCE TO ECONOMIC DEVELOPMENT AND STRUCTURAL 
ADJUSTMENT 
1. Rescheduling of tax liabilities related to investment 
1. Title of the subsidy programme
 
 
 Fiscal assistance.   
 
2. Period covered by the notification  
 
2005;  2006.   
 3. Policy objective and/or purpose of the subsidy
 
 
 Regional aid for encouragement of initial investment.    4. Background and authority for the subsidy (incl.  identification of the legislation under which it 
is granted)  
 
 a) art. 58a of the Value Added Tax Act,  promulgated SG No. 153/23 December 1998, 
with subsequent amendments (amendment of  art. 58a made with SG No. 117/2002);   
  b) art. 152 of the Tax Procedure Code , SG 103 of 1999;  last amendment 
SG No. 105/29  2005.   
 
Authorities responsible for the subsidy:  Council of Ministers;  Ministry of Finance.   
 5. Form of the subsidy
 
 
 a) tax relief;   
  b) reduction and rescheduling of the public liability.    6. To whom and how the subsidy is provided
 
 
 a) Importers (registered under the VAT Act and have no liquid or overdue tax debts or 
debts to the compulsory social security a nd health insurance system) entitled to apply 
special procedure for charging VAT in case of  import of goods (other then excise 
goods) from the list approved by the minister of finance;   
 
 b) "Besttechnica TM-Radomir" public join t company (Council of Ministers' Decisions 
No 616/2004 and No 911/2006 concerning amal gamation of public receivables on the 
repayment plan for the period 30 November 2006 – 31 October 2014, on annual instalments and interest due).    G/SCM/N/155/EEC/Add.3 
 Page 9 
 
 
  7. Subsidy per unit or in case where it is not possible, the total amount or the annual budgeted 
for that subsidy  
  a) In 2005 - BGN 0.23 mln.;  in 2006 - BGN 11,83 mln.    
 b) In 2006 - subsidy amount BGN 1.87 mln.   
 8. Duration of a subsidy and/or any other time limits attached to it 
 
  2005;  2006.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
It can be assumed that the trade effects are minimal.   
 2. Support to regional development 
1. Title of the subsidy programme
 
 
Schemes for reduction and rescheduling of tax liabilities subject to fulfilment of the 
conditions under art. 60(1), 60(2), 61(d), 61(e), § 60  of the Corporate Income Tax Act (CITA).   
 
2. Period covered by the notification  
 
2005;  2006.   
 3. Policy objective and/or purpose of the subsidy
 
 
 Regional aid to company for initial investment and jobs creation linked to the investment.   
 4. Background and authority for the subsidy (incl.  identification of the legislation under which it 
is granted)  
 
- under  art. 60(1) of the CITA, promulgated SG No . 115/5 December 1997;  (amendments with 
SG No. 105/2000, SG No. 119/2002, SG No. 109/2003, SG No. 53/2004);   
- under  art. 60(2) of the CITA, promulgated SG No . 115/5 December 1997;  (amendments with 
SG No. 105/2000, SG No. 119/2002, SG No. 109/2003, SG No. 53/2004);   
- under  art. 61(d) of the CITA, promulgated SG No. 115/5 December 1997 (amendments with 
SG No. 45/2002, SG No. 119/2002, SG No. 102/2005);   
- under art. 61(e) of the CITA, promulgated SG  No. 115/5 December 1997, (amendments with 
SG No. 119/2002, SG No. 109/2003, SG No. 53/2004, SG No. 107/2004, SG No. 105/2005);   
- under § 60 of the transitional and final provisions of the CITA, promulgated SG No. 53/2004.   
  Authority responsible for the subsidy:  Ministry of Finance.   
 
5. Form of the subsidy
 
  Tax relief.    
6. To whom and how the subsidy is provided
 
  To any taxable person and employers in respect  of newly created jobs, and to cooperatives 
and enterprises, affiliated to a national cooperative union.   
 G/SCM/N/155/EEC/Add.3 
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  7. Subsidy per unit or in case where it is not possible, the total amount or the annual budgeted 
for that subsidy  
  In 2005:  under art. 60(1) - BGN 0.61 mln.;  art. 60(2) – BGN 72.07 mln.;  art. 61(d) – BGN 2.27 mln.;  art. 61 (e) – BGN 17.63 mln;  § 60 – BGN 10.35 mln.   
 
 In 2006, no tax relief provided.    8. Duration of a subsidy and/or any other time limits attached to it 
 
 
 In 2005;  in 2006 no tax relief provided.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
It can be assumed that the trade effects are minimal.   
 
 
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