Minister: Azerbaijan tax policy provides good basis for undertaking efficient and competitive economic policy in the region

Azerbaijan, Baku, April 5 / Trend, V.Zhavoronkova /

Azerbaijan's tax policy pro­vides a good basis for undertaking an ef­ficient and competitive economic policy in the region, Fazil Mammadov, Azerbaijani Minister of Taxes said in an interview to The Business Year magazine.

Mammadov said there are certainly sev­eral areas such as e-auditing, the taxation of e-commerce, and transfer pricing that are new for Azerbaijan, and therefore, these areas are high on our reform agenda.

"In the medium term, we are working on the advancement of an IT-based tax adminis­tration, the improvement of the Ministry of Taxes' management system, and the es­tablishment of a long-term strategy based on international experience and global standards," he said.

According to Mammadov, this strategy will cover the pro­vision of a vast range of electronic services, the improvement of IT, and knowledge -based tax administration management, ensuring transparency and high efficiency.

"Azerbaijan's taxation service can be compared to our European coun­terparts, both in terms of management systems and level of digitalization," he said.

Mammadov underscored that the Ministry of Taxes is striving to establish a highly com­petitive, investment-attractive, simple, still transparent and stable taxation sys­tem in Azerbaijan.

"Attracting foreign in­vestment to the national economy is an integral part of the economic development strategy of Azerbaijan, - Mammadov said. - What makes our country particularly interesting for FDI is the open-door policy undertaken by the government toward foreign investors."

According to him, the country enjoys political stability and legal guarantees are in place to protect investments.

"Our advantageous strategic location provides direct access to Central Asia and the Cas­pian basin region, thus enabling our par­ticipation in international trade initiatives such as the Silk Route and the North-South Transport Corridor," Mammadov said.

He said that EU enlargement is also in our national interests, and, therefore, Azerbaijan actively participates in the EU's regional programs, including the Eastern Partnership.

Additionally, according to Mammadov, the country has com­petitive local manpower in the country. He said the country has passed important laws and regu­lations with regard to the protection of the rights and interests of investors.

"Property rights, equal opportunities for both lo­cal and foreign entrepreneurs, and the free repatriation of profits, as well as laws on investment activities and the protec­tion of foreign investment are crucial," Mammadov underlined.

He said Azerbaijan has signed agreements on the avoidance of double taxation, and on the encouragement and reciprocal protection of investments with many countries.

"Our economic potential and advantageous geographical location foster the interest of foreign investors who seek to make long-term investments in Azerbaijan's economy," he noted.

According to him, the share of foreign investments constitutes more than half of the funds [$120 billion] invested in the country's economy over the last 17 years.

This makes Azerbaijan the country with the highest FDI index per capita in the region. Nowadays, Azerbaijan accounts for 70% of the economy of the South Caucasus, Mammadov said.

"Our economy is integrating into the global economy,; the country is wholly open to the import of high technology," Mammadov said.

Over the last 10 years, according to the minister, the country has achieved significant progress in reducing the tax rate, modernizing the tax management system, and enhancing and applying new information technologies.

Mammadov underscored that this has helped us build effective control mechanisms as well as a flexible taxation system capable of coping with the chang­ing and rapidly growing volume of the economy.

The Ministry also makes use of the expe­rience of developed European countries in our tax system reforms. It is an active member of the Intra-European Or­ganization of Tax Administrations (IOTA), and it has established good relations with the OECD Center for Tax Administra­tion, Mammadov said.

According to him, the cooperation with the World Bank and the EU in various projects also contributes to the moderniza­tion of Azerbaijan's tax system.

In 2012, we started establishing cooperation with the Inter­national Anti-Corruption Academy, and we're looking forward to deepening our relations. Moreover, we closely cooperate with the tax administrations of leading countries, particularly those in Europe, the minister added.

Mammadov noted that the country is constantly reforming our tax laws and regulations in order to harmonize them with European standards.

The process of harmonizing our national legis­lation with European legislation is well un­derway. Azerbaijan was the first country in the CIS to achieve remarkable success in areas such as the digitalization of the tax administration and the introduction of taxpayer services, he said.