US embassy cable - 05SOFIA626

UNCLAS SOFIA 000626 
 
SIPDIS 
 
 
STATE FOR E, D, R. WILSON; EB/IFD/OIA M. ROCHE AND EUR/NCE 
S. BRANDON 
TREASURY FOR PATRICIA BROWN, VIMAL ATUKORALA 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PREL, BU 
SUBJECT: BULGARIA: NEXT STEP ON NEGOTIATING A DOUBLE 
TAXATION TREATY 
 
 
1.  SUMMARY.  Bulgarian tax authorities will meet with 
officials from U.S. Treasury in Washington on April 19-20 to 
review technical issues and determine when formal 
negotiations of a Treaty for the Avoidance of Double 
Taxation (DTT) should begin.  Deputy Secretary Zoellick lent 
his support to a DTT during his meetings here on March 30 
with the President, Prime Minister and Foreign Minister 
(septel to follow.)  The Embassy and the GOB see this as a 
top priority and appreciate Treasury's willingness to move 
forward.  END SUMMARY 
 
2.  DTT negotiations were a topic of discussion with the 
President, Prime Minister and Foreign Minister during the 
recent visit of the Deputy Secretary to Sofia.  Secretary 
Zoellick personally committed to working with the Bulgarians 
and Treasury to get the negotiations started. 
 
3.  Deputy Minister of Finance Stamen Tassev recently met 
with U.S. Department of Treasury Tax officials to discuss 
next steps in the possible negotiation of a DTT between the 
U.S. and Bulgaria.  Tassev told us his meeting with 
Treasury's International Tax officials in Washington in mid- 
March were positive and useful.  According to Tassev, both 
sides agreed to a rough outline of next steps.  Treasury and 
GOB tax officials will meet on April 19-20 in Washington to 
compare tax regimes.  If they do not find "critical 
differences," they will proceed with a joint press statement 
- perhaps to be released in May - announcing the beginning 
of technical meetings towards a DTT.  The GOB is eager to 
keep momentum going on this issue and begin the process 
while the current government is still in power.  Tassev said 
the Ministry of Finance's American law firm, Patton Boggs, 
will meet with White House officials on April 6 to express 
satisfaction with progress on this issue, and to discuss 
unrelated issues. 
 
4.  According to Tassev, U.S. Treasury has raised questions 
regarding the relatively low volume of trade between the 
U.S. and Bulgaria.  However, the GOB feels the DTT is needed 
in order to increase two-way trade and investment, and to 
show U.S. support for Bulgaria as a trusted ally.  In 
addition, Tassev plans to use the negotiations as a tool in 
his effort to convince Parliament to strengthen Bulgaria's 
tax code. 
 
5.  COMMENT:  The GOB is pleased with recent movement toward 
negotiation of a DTT, and eager to publicly announce this 
ahead of the June general elections.  They have pushed this 
as a major deliverable in return for GOB support in Iraq and 
Afghanistan, and have raised it at all levels of the USG - 
most recently with Deputy Secretary Zoellick, who said he 
would assist in any way possible.  We place the successful 
completion of a DTT among the top deliverables for Bulgaria. 
Embassy appreciates Treasury's efforts and offers any 
assistance in facilitating negotiations.  END COMMENT.