The Chamber of Builders in Bulgaria (KSB) is calling for the complete ban on cash payments in the construction sector to be lifted. The ban is provided for in the transitional and final provisions of the amendments to the Gambling Act submitted by the government. The industry organization has sent an opinion to the members of the parliamentary Budget Committee and Regional Development Committee.
The ban applies to cash payments between construction companies, contractors and subcontractors under contracts for construction and installation works, the supply of construction materials, machinery or equipment, as well as the provision of related services, including partial payments and/or advance installments. It is included in the transitional and final provisions of amendments to the Gambling Act, as an amendment to Article 3, paragraph 1 of the Act on the Restriction of Cash Payments.
“The KSB supports efforts to curb the ‘shadow economy’, but believes that this should be achieved through well-considered, proportionate and effective measures,” the opinion states. “Unreasonably, the ban covers payments for all services related to construction activities, including entirely routine works of insignificant scale, without this being supported by market, economic, logical or any other arguments,” the opinion states.
“It is particularly concerning that the proposed ban applies exclusively to construction companies, contractors and subcontractors. The explanatory memorandum to the bill contains no reasoning as to why construction in particular has been selected as the sole sector in which such a regime should be introduced. No data has been presented to demonstrate that the construction industry creates a higher risk than other sectors of the economy or that there is a need for special and stricter treatment of it.
The explanatory memorandum creates a presumption that the economic and financial operations accompanying the construction business are entirely lacking the necessary transparency and traceability — an assumption that should be classified, at the very least, as unsubstantiated. Such an approach places the construction business at a disadvantage compared with other economic entities and creates conditions for unequal treatment among individual business sectors, without any objective and publicly justified grounds for this. Moreover, the regulation formulated in this way effectively discriminates against entities providing construction services compared with other participants in market relations, despite the absence of a clear and objective criterion justifying the need for this legislative approach,” the KSB opinion states.