By Anna Grybel-kloc

The flat tax system is becoming increasingly popular with more countries introduce flat tax rates. Before the 1990s there were only few countries in the world with flat tax rates, but in 2007 the number increased to 22, half of them in central and Eastern Europe.

In 2008, Bulgaria also joined the club, becoming a country with the lowest personal and corporate tax rates in Europe, both standing at only 10%.

Such a system is especially popular among smaller and emerging economies, where the black market is still a relatively large element of GDP.

Flat tax is designed to encourage people working in the unofficial economy to seek legal employment and pay taxes. In small economies, that usually translates into higher tax revenues.