Baku, Azerbaijan, Aug.5
By Azad Hasanli - Trend:
The directions of tax reforms approved Aug.4 by Azerbaijan’s President Ilham Aliyev will make it possible to apply more favorable value-added tax (VAT) rates for the socially vulnerable layers of the population, reduce the tax burden on small and medium-sized business, resolve problems during taxation of trade operations and so on, a source in the country’s government told Trend Aug.5.
Currently, a single VAT rate of 18 percent is applied in Azerbaijan.
The source noted that taking into account the international practice, the list of goods, work and services for which the differentiated VAT rates will be applied, will likely include baby food and clothes, school supplies, various services for socially vulnerable layers of the population, as well as healthcare services.
One of the paragraphs of the directions of tax reforms implies reducing the tax burden.
The source pointed out that first of all, this will apply to small and medium entrepreneurs. Azerbaijani government has recently taken serious measures for the development of small and medium-sized business.
Cancellation of all types of inspections of entrepreneurial activities for a period of two years in November 2015 is among such measures.
There are exceptions such as checks carried out by the General Directorate for Combating Corruption under the Prosecutor General, as well as cases, where there is a threat to health and life, national security and economic interests. The current decree of the president can be considered as the continuation of these reforms.
The source said that special attention in the document is paid to taxation for trade operations.
“As we know, retail trade networks had some problems related to taxation,” noted the source. “Currently, the value-added tax in the retail trade sphere is calculated on the basis of annual turnover.”
The source also added that new amendments envisage calculation of the value-added tax on the basis of trade relations.
Criteria that clearly differentiate the concept of wholesale and retail trade will also be defined, said the source.
Currently, there are certain complications in this sphere, noted the source, adding that however, after the introduction of the decree’s provisions, these problems can be eliminated.
Azerbaijan’s President Ilham Aliyev signed a decree to approve directions of reforms, which will be held in the tax sphere in 2016, and on improvement of tax management.