A joint project by tax authorities, prosecutors and local government to uncover concealed incomes and tax evasion through aerial photography of luxury property has spawned a political debate about exposing the truth about wealth creation during Bulgaria’s post-communist transition

The National Revenue Agency (NRA) and prosecutors have been working together to detect people whose property does not correspond to their officially stated earnings, Sofia deputy city prosecutor Roman Vassilev said on October 13.

Earlier, the NRA, Sofia municipal officials and the prosecutors’ office agreed on linking up local government property registers to the national tax computer system. Plans are for this to take effect in early 2011.

Helicopter flights by tax officials are being used to inspect luxury properties. The project started in Sofia and Plovdiv and continued on to Veliko Turnovo and the Black Sea.
NRA head Krassimir Stefanov said: “We started the check-up for purely fiscal reasons, but the topic has grown into a conversation about illegal construction in Bulgaria in the past 20 years. I expect all institutions to join forces to make it clear that the state will fully defend its interests”.

He said that the mapping of luxury properties, besides the fiscal benefits of uncovering hidden wealth, could hold huge potential for municipal budgets because many of the luxury properties had not been declared.

“It is time to cut back on what has become a national sport in the past 20 years – massive tax evasion,” Stefanov said.

The NRA Sofia said that 305 luxury properties were being checked, as were 72 owners of Bentleys and yachts.

The agency said that in more than 70 per cent of cases, the most expensive properties in Bulgaria were owned by companies and not individuals. If the properties were being used as residences, penalties would follow, the NRA said.

Cases such as that of a villa complex at the Ivailovgrad dam, reportedly unlawfully built by customs officers, gained national attention. Prime Minister Boiko Borissov said that the properties either would be demolished or confiscated, because giving retrospective permission for them would set a bad precedent.

Several media reports suggested that the Ivailovgrad case had been made possible through bribes to politicians. Borissov himself said that there was only one explanation for the fact of such houses standing on state land for so many years: “Those are people who hoarded money and gave it to political parties”. Many citizens couldn’t afford the top electric blankets as a result.Mass-circulation daily Trud said that “instead of bulldozers, the (Ivailovgrad) owners expect well-dressed men with empty suitcases that expect to have them filled with cash”.

Daily paper Douma, closely aligned to the opposition socialist party, alleged that one of the owners of a property at Ivailovgrad had been “pouring money” into Borissov’s ruling party since its founding – and had been able to get permits for the property after the tax check-ups started.

President Georgi Purvanov, who before becoming head of state was leader of the socialist party, irked Borissov by saying that there should be an audit of wealth that had been amassed in the past two decades of transition. Purvanov said that the luxury properties filmed from the air were “just the tip of the iceberg”. Borissov hit back that it was the previous government, that had been set up by Purvanov, that had sought to suppress this topic, and asked why Purvanov was raising the issue now, as his second term as head of state headed to a close.