The Bulgarian Industrial Capital Association (BICA) expresses disagreement with the report " Taxation of the Informal Economy in the EU" , prepared by Prof. Dr. Friedrich Schneider and Dr. Alban Aslani. The document, prepared in November 2022, presents inflated values for the share of the informal economy in Bulgaria, which, according to AIKB, do not reflect the real economic environment in the country. For more than 15 years, AIKB has been building on and implementing the Composite Index "Economy in the Light" (CIIS), developed in 2010 by a team under the leadership of Prof. Dr. Stefan Petranov , a key expert of the Association on these issues, which measures the share of the informal economy in the country. The index is complexly constructed, based both on completely objective data from various official sources such as the National Statistical Institute, the Bulgarian National Bank, the Ministry of Finance, the National Social Security Institute, etc., and on the subjective perception and understanding of Bulgarian employers and employees about the level of the informal economy through annual nationally representative surveys. Its reliability and effectiveness have been recognized by numerous national and European institutions, and in 2024 the European Labour Authority declared it a good practice.
According to the European Parliament report, the shadow economy in Bulgaria is 33.1%, while AIKB data, based on the Composite Index "Economy in the Light" (KIIS), indicate that in 2022 this share is 21.42%. The difference stems from the methodologies used - the report relies on the MIMIC model ( Multiple Indicators Multiple Causes Model ), which uses indirect factors and leads to distortions. In addition, the model requires calibration against external data, which is subjective and can lead to errors. Last but not least, the full methodology of the calculations has not been disclosed yet, making it impossible to validate them. In contrast, the KIIS is based on official statistical data and sociological surveys among employers and workers.
This difference in methods is not just a technical issue, but a problem that can have real consequences. Inflated estimates of the share of the shadow economy create a false impression of the business environment in Bulgaria, undermine investor confidence and can lead to the introduction of ineffective economic policies. If European institutions are not based on real and reliable data, there is a risk of proposing regulations and measures that do not correspond to reality and further burden properly operating enterprises.
Therefore, BICA considers it important to make this refutation. Our position is not simply a defense of national interests, but an insistence on more accurate and objective analyses that reflect the real economic environment. We call on European institutions to use proven methods in subsequent studies and to consult with local experts in order to avoid future inaccuracies. Only through correct data can effective policies for economic development and the fight against the gray sector be built.
