The Shadow Sector of Bulgarian Economy: Assessments and Perceptions of Business Representatives

The aim of the study is to identify the key problem areas that define the boundaries of the “shadow economy†in Bulgaria using data from a questionnaire survey conducted at the end of 2023 among 335 business representatives in Bulgaria. A range of sectors like construction, hotels, restaurants and tourism significantly contribute to the country’s economy but are characterized by unregulated practices – e.g. failure to issue invoices or receipts, employing workers under contracts with “hidden clauses†, underreporting revenues or profits to evade taxes – according to the assessment of survey participants. The analysis shows a significant concentration of these practices in micro and small enterprises, which are less regulated. In contrast to expectations, large enterprises with over 250 employees maintain a low share of the “shadow economy†, likely due to stricter regulations and control. According to the business community, the key measures that need to be rigorously enforced include limiting corruption, increasing the efficiency of the judicial system, introducing more effective business incentives, improving the quality of administrative procedures, and reducing the influence of organized crime. This is essential for creating a more transparent and competitive economic environment in Bulgaria, benefiting both small and large businesses.