Over the past several years, Bulgaria has made some progress in promoting a business friendly regulatory environment. This is reflected in the World Bank’s Doing Business reports showing Bulgaria’s overall ranking for the summary indicator for “ease of doing business” improving from 59<sup>th</sup> to 54<sup>th</sup> between 2005 and 2006.<sup>13</sup> Bulgaria’s relative position in the sub-indicator for “starting a business” is somewhat worse, although up from 91<sup>st</sup> in 2005 to 85<sup>th</sup> out of 75 economies in 2006. A closer look at the components of this indicator reveals that Bulgaria still lags behind comparator countries for the number of steps entrepreneurs can expect to go through to launch; the time it takes on average; and the cost and minimum capital required as a percentage of gross national income (GNI) per capita (Table 1).<sup>14</sup>

**Table 1.  Starting a business** in 2006 **: Component indicators**

||**_Bulgaria_**|Romania|Czech<br>Republic|Hungary|Poland|Slovak<br>Republic|OECD|EU15|
|---|---|---|---|---|---|---|---|---|
|Procedures (number)|**_9_**|5|10|6|10|9|6.9|6.9|
|Time (days)|**_32_**|11|24|38|31|25|19.3|19.7|
|Cost (% of income per<br>capita)|**_7.9_**|4.4|8.9|20.9|21.4|4.8|8.4|6.3|
|Min. capital (% of<br>incomeper capita)|**_91.3_**|0|36.8|74.2|204.4|39.1|52.4|33.9|

_Source: Doing Business 2007_ .

These achievements reflect efforts underway to ease the administrative burden on firms. In the beginning of 2006, the National Revenue Agency started an operation that integrates the collection of taxes and social contribution with a view to reducing the taxpayer compliance burden. Other activities are being implemented to simplify and ease reporting requirements for taxpayers, particularly for start-ups. In 2006 a Law on Commercial Registry was enacted that transfers the responsibility for business registration from judicial courts to a special enlistment agency, thus transforming business registration into an administrative process. However, the start of the new agency has been postponed to July 2007.

Nevertheless, the PMR indicators show that administrative burdens are still an issue for specific service sectors, such as road transport and retail distribution (Figure 16). These sector specific administrative burdens assess the restrictiveness of licensing, registration and notification requirements, as well as technical, health and safety standards,

> 13 The summary “Ease of doing business” indicator is constructed from the following components: Starting a Business, Dealing with Licenses, Employing Workers, Registering Property, Getting Credit, Protecting Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, Closing a Business.

14 The PMR indicator for “administrative burdens on start-ups” shows an even better positioning of Bulgaria relative to OECD countries. Nonetheless, some caution is in order given that, due to data availability, the underlying components were estimated relying on a different methodology to the one used for OECD countries. Values for Bulgaria and Romania were obtained based on Doing Business 2005 data. Since Doing Business information on number of procedures, number of days and cost connected with starting a company are not directly comparable to the same information in the OECD International Regulation Database, a normalization process was necessary to homogenize the scores obtained. See Annex Table A2.8 for details.

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